**Exhibit 2**

** **

**AMENDEDAND RESTATEDSHAREHOLDER RIGHTS PLAN AGREEMENT**

 

**BETWEEN**

 

**ÆTERNAZENTARIS INC.**

 

**- and-**

 

**COMPUTERSHARETRUST COMPANY OF CANADA,**

 

**asRights Agent**

 

 

 

**DATEDAS OF MARCH 5, 2007**

 

**(amendingand restating the Shareholder Rights Plan Agreementmade as of March 29, 2004)**

 

 

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**TABLEOF CONTENTS**

 
| ARTICLE 1 INTERPRETATION            | 3      |
|------------------------------------------|--------|
|                                     | 1.1    | Certain Definitions | 3 |
|                                     | 1.2    | Currency | 14 |
|                                     | 1.3    | Number and Gender | 14 |
|                                     | 1.4    | Sections and Headings | 14 |
|                                     | 1.5    | Statutory References | 14 |
|                                     | 1.6    | Determination of Percentage Ownership | 15 |
|                                     | 1.7    | Acting Jointly or in Concert | 15 |
|                                     |   |   |   |
| ARTICLE 2 THE RIGHTS                | 15     |
|                                     | 2.1    | Legend on Share Certificates | 15 |
|                                     | 2.2    | Initial Exercise Price; Exercise of Rights; Detachment of Rights | 16 |
|                                     | 2.3    | Adjustments to Exercise Price; Number of Rights | 19 |
|                                     | 2.4    | Date on which Exercise is Effective | 25 |
|                                     | 2.5    | Execution, Authentication, Delivery and Dating of Rights Certificates | 25 |
|                                     | 2.6    | Registration, Transfer and Exchange | 25 |
|                                     | 2.7    | Mutilated, Lost, Stolen and Destroyed Rights Certificates | 26 |
|                                     | 2.8    | Persons Deemed Owners | 27 |
|                                     | 2.9    | Delivery and Cancellation of Certificates | 27 |
|                                     | 2.10   | Agreement of Rights Holders | 27 |
|                                     |   |   |   |
| ARTICLE 3 ADJUSTMENTS TO THE RIGHTS | 28     |
|                                     | 3.1    | Flip-in Event | 28 |
|                                     | 3.2    | Fiduciary Duties of the Board of Directors of the Corporation | 30 |
|                                     |   |   |   |
| ARTICLE 4 THE RIGHTS AGENT          | 30     |
|                                     | 4.1    | General | 30 |
|                                     | 4.2    | Merger, Amalgamation, Consolidation or Change of Name of Rights Agent | 31 |
|                                     | 4.3    | Duties of Rights Agent | 31 |
|                                     | 4.4    | Change of Rights Agent | 33 |
|                                     |   |   |   |
| ARTICLE 5 MISCELLANEOUS             | 34     |
|                                     | 5.1    | Redemption, Waiver and Termination | 34 |
|                                     | 5.2    | Expiration | 36 |
|                                     | 5.3    | Issuance of New Rights Certificates | 36 |
|                                     | 5.4    | Supplements and Amendments | 36 |
|                                     | 5.5    | Fractional Rights and Fractional Shares | 38 |
|                                     | 5.6    | Rights of Action | 38 |
|                                     | 5.7    | Holder of Rights Not Deemed a Shareholder | 39 |
|                                     | 5.8    | Notice of Proposed Actions | 39 |
|                                     | 5.9    | Notices | 39 |
|                                     | 5.10   | Costs of Enforcement | 40 |
|                                     | 5.11   | Regulatory Approvals | 40 |
|                                     | 5.12   | Declaration as to Non-Canadian and Non-U.S. Holders | 40 |
|                                     | 5.13   | Successors | 41 |
|                                     | 5.14   | Benefits of this Agreement | 41 |
|                                     | 5.15   | Determination and Actions by the Board of Directors | 41 |

 

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|   | 5.16 | Governing Law       | 41 |
|--------|------|---------------------|----|
|   | 5.17 | Language            | 41 |
|   | 5.18 | Counterparts        | 41 |
|   | 5.19 | Severability        | 41 |
|   | 5.20 | Effective Date      | 42 |
|   | 5.21 | Time of the Essence | 42 |

 

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**AMENDEDAND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT**

 

**THIS AMENDED AND RESTATED SHAREHOLDER RIGHTSPLAN AGREEMENT**is made as of the fifth (5th) day of March, 2007 (amending andrestating the Shareholder Rights Plan Agreement dated as of March 29,2004).

 
| **BETWEEN:** | ** ** | **ÆTERNA ZENTARIS INC.**, 1405, boulevard du Parc-Technologique,  Quebec City, QC G1P 4P5 |
|--------------|------------|-----------------------------------------------------------------------------------------------------|
|         |       |                                                                                                |
|         |       | (the “**Corporation”**)                                                                   |
|         |       |                                                                                                |
| **AND:**     | ** ** | **COMPUTERSHARE TRUST COMPANY OF CANADA**, 1500 University, Suite 700, Montreal, QC H3A 3S8    |
|         |       |                                                                                                |
|         |       | (the “**Rights Agent**”)                                                                  |

 

**WHEREAS:**

 

A.                                 The Board of Directors has determined that it is advisable to adopta shareholder rights plan (the “**Rights Plan**”)to ensure, to the extent possible, that all shareholders of the Corporation aretreated fairly in connection with any take-over offer or other acquisition ofcontrol of the Corporation.

 

B.                                   The Corporation and National Bank Trust Inc. entered into ashareholder rights plan agreement dated as of March 29, 2004 in order toadopt the Rights Plan (the “**Original Agreement**”).

 

C.                                   On May 1, 2006,Computershare Trust Company of Canada acquired, *inter alia*,certain assets and operations from NationalBank Trust Inc., including the latter’s transfer agency and registrar servicesand operations.

 

D.                                  In connection with the transfer of assets and operation described inthe preceding paragraph, Computershare Trust Company of Canada succeeded to National Bank Trust Inc. as Rights Agent underthe Original Agreement.

 

E.                                    In order to implement the Rights Plan, the Board of Directors:

 

(a)          authorizedand declared a distribution of one right (a “**Right**”)in respect of each Share outstanding at the Record Time;

 

(b)         authorizedthe issuance of one Right in respect of each Share issued after the Record Timeand prior to the earlier of the Separation Time and the Expiration Time; and

 

(c)          authorizedthe issuance of Rights Certificates to holders of Rights pursuant to the termsand subject to the conditions set forth herein.

 

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F.                                    Each Right entitles the holder thereof, after the Separation Time,to purchase securities of the Corporation pursuant to the terms and subject tothe conditions set forth herein.

 

G.                                   In connection with the ratification of thecontinued existence of the Rights Plan at the Corporation’s 2007 annual meetingof shareholders pursuant to Section 5.15 of the Original Agreement, theBoard of Directors, acting in good faith, wishes to make certain amendments tothe Original Agreement, which amendments will require the approval of theIndependent Shareholders in accordance with Section 5.4 of the OriginalAgreement.

 

H.                                  The Corporation and the Rights Agent wish to amend and restatethe Original Agreement by entering into this Agreement, which amendment andrestatement shall become effective upon the Independent Shareholders approvingthe continued existence of the Original Agreement, as amended hereby.

 

I.                                       The Corporation desires to confirm its appointment ofComputershare Trust Company of Canada as the Rights Agent to act on behalf ofthe Corporation, and the Rights Agent is willing to continue to so act, in connectionwith the issuance, transfer, exchange and replacement of Rights Certificates,the exercise of Rights and other matters referred to herein.

 

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**NOW THEREFORE** inconsideration of the premises and respective agreements set forth herein, theparties hereby agree as follows:

 

**ARTICLE 1INTERPRETATION**

** **

**1.1**                               Certain Definitions

** **

For the purposes of this agreement (the “**Agreement**”), including the recitals hereto, the followingterms have the meanings indicated:

 

a)                                      “**AcquiringPerson**” shall mean any Person who is at any time after the EffectiveDate the Beneficial Owner of 20% or more of the outstanding Voting Shares ofthe Corporation; provided, however, that the term “**AcquiringPerson**” shall not include:

 

(i)                                   the Corporation or any corporation controlled by the Corporation;

 

(ii)                                any Person who becomes the Beneficial Owner of 20% or more of theoutstanding Voting Shares as a result of one or any combination of:

 

(A)                             a Voting Share Reduction;

 

(B)                               a Permitted Bid Acquisition;

 

(C)                               an Exempt Acquisition; or

 

(D)                              a Pro Rata Acquisition;

 

provided, however, that if a Person shallbecome the Beneficial Owner of 20% or more of the outstanding Voting Shares byreason of one or any combination of a Voting Share Reduction, a Permitted BidAcquisition, an Exempt Acquisition or a Pro Rata Acquisition, and thereafterbecomes the Beneficial Owner of an additional one percent of the Voting Sharesthen outstanding (otherwise than pursuant to a Voting Share Reduction, aPermitted Bid Acquisition, an Exempt Acquisition or a Pro Rata Acquisition orany combination thereof), then, as of the date that such Person becomes aBeneficial Owner of such additional Voting Shares, such Person shall become an “**Acquiring Person**”; or

 

(iii)                                an underwriter or member of a banking or selling group acting insuch capacity that becomes the Beneficial Owner of 20% or more of the VotingShares in connection with a distribution of securities; or

 

(iv)                               a Person (a “**Grandfathered Person**”)who is the Beneficial Owner of 20% or more of the outstanding Voting Sharesdetermined as of the Record Time, provided, however, that this exemption shallnot be, and shall cease to be, applicable to a Grandfathered Person in theevent that such Grandfathered Person shall, after the Record Time, become theBeneficial Owner of additional Voting Shares that increases its BeneficialOwnership of Voting Shares by more than one 

 

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percent of thenumber of Voting Shares outstanding as at the Record Time, other than throughone or any combination of a Voting Share Reduction, a Permitted BidAcquisition, an Exempt Acquisition or a Pro Rata Acquisition.

 

b)                                     “**Affiliate**”shall mean, when used to indicate a relationship with a specified bodycorporate, a Person that directly or indirectly through one or moreintermediaries controls, or is a body corporate controlled by, or under commoncontrol with, such specified body corporate.

 

c)                                      “**Amendment Date**” means the date upon which this Agreementamends, restates and supersedes the Original Agreement in accordance with Section 5.20 hereof.

 

d)                                     “**Associate**”shall mean, when used to indicate a relationship with a specified Person, (i) aspouse of that Person, (ii) any Person of the same or opposite sex withwhom that Person is living in a conjugal relationship outside marriage, (iii) anyrelative of that Person if that relative has the same residence as that Personor (iv) any relative of such spouse or other Person referred to in theimmediately preceding clauses (i), (ii) or (iii) above, if thatrelative has the same residence as the specified Person.

 

e)                                      A Person shall be deemed the “**Beneficial Owner**” of, and to have “**BeneficialOwnership**” of, and to “**Beneficially Own**”:

 

(i)                                     any securities of which such Person or any of such Person’sAffiliates or Associates is owner at law or in equity;

 

(ii)                                  any securities which the Person or any of such Person’s Affiliatesor Associates has the right to acquire within 60 days (where such right isexercisable within a period of 60 days whether or not upon the occurrenceof a contingency or the making of a payment) pursuant to any ConvertibleSecurity, agreement, arrangement, pledge or understanding, whether or not inwriting (other than (A) customary agreements with and between underwritersand/or banking group and/or selling group members with respect to adistribution of securities or (B) pledges of securities in the ordinarycourse of the pledgee’s business); and

 

(iii)                               any securities that are Beneficially Owned within the meaning ofclause (i) or (ii) of this Subsection 1.1e) by anyother Person with which such Person is acting jointly or in concert;

 

provided, however, that a Person shall not bedeemed the “**Beneficial Owner**” of, or to have “**Beneficial Ownership**” of, or to “**BeneficiallyOwn**”, any security;

 

(iv)                              because such security has been deposited or tendered pursuant to aTake-over Bid made by such Person or any of such Person’s Affiliates orAssociates or any other Person acting jointly or in concert with such Personuntil such deposited or tendered security is taken up or paid for, whichevershall first occur;

 

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(v)                                 because such security has been agreed to be deposited or tenderedpursuant to a Lock-up Agreement until such deposited or tendered security istaken up or paid for, whichever shall first occur;

 

(vi)                              because such Person or any of the Affiliates or Associates of suchPerson or any other Person referred to in clause 1.1e)(iii) above holdssuch security provided that: (A) the ordinary business of any such Person(the “**Fund Manager**”) includes the managementof pension, mutual, pooled or investment funds for others and such security isheld by the Fund Manager in the ordinary course of such business in theperformance of such Fund Manager’s duties for the account of any other Person(a “**Client**”), including non-discretionaryaccounts held on behalf of a Client by a broker or dealer registered underapplicable laws;  (B) such Person(the “**Trust Company**”) is licensed to carry onthe business of a trust company under applicable laws and, as such, acts astrustee or administrator or in a similar capacity in relation to the estates ofdeceased or incompetent Persons (each an “**Estate Account**”)or in relation to other accounts (each an “**Other Account**”)and holds such security in the ordinary course of such duties for such EstateAccounts or for such Other Accounts;  (C) suchPerson (the “**Plan Administrator**”)is the administrator or the trustee of one or more pension funds or plans (a “**Plan**”) registered under the laws of Canada or any provincethereof or the laws of the United States of America or any state thereof andsuch security is held by the Plan Administrator or the Plan in the ordinarycourse of such Plan Administrator’s or Plan’s activities;  (D) such Person (the “**Statutory Body**”) is established by statute for purposes thatinclude, and the ordinary business or activity of such Person includes, themanagement of investment funds for employee benefit plans, pension plans orinsurance plans of various public bodies and such security is held by the StatutoryBody in the ordinary course of the management of such investment funds; (E) suchPerson (the “**Crown Agent**”)is acting as an agent of the Crown for purposes that include, and the ordinarybusiness or activity of such Person includes, the management of public assetsand such security is held by the Crown Agent in the ordinary course of themanagement of such public assets; or (F) such Person is a Plan and suchsecurity is held by the Plan in the ordinary course of such Plan’s activities;provided, however, that in any of the foregoing cases the Fund Manager, theTrust Company, the Plan Administrator, the Statutory Body, the Crown Agent orthe Plan, as the case may be, is not then making or has not then announced acurrent intention to make a Take-over Bid, alone or by acting jointly or inconcert with any other Person, other than an Offer to Acquire Voting Shares orother securities (x) pursuant to a distribution by the Corporation or (y) bymeans of a Permitted Bid or (z) by means of market transactions made inthe ordinary course of business of such Person (including pre-arranged tradesentered into in the ordinary course of business of such Person) executedthrough the facilities of a stock exchange or organizedover-the-counter-market;

 

(vii)                         because such Person is a Client of the same Fund Manager as anotherPerson on whose account the Fund Manager holds such security, or because suchPerson is an Estate Account or an Other Account of the same Trust Company asanother 

 

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Personon whose account the Trust Company holds such security, or because such Personis a Plan with the same Plan Administrator as another Plan on whose account thePlan Administrator holds such security;

 

(viii)                      because such Person is a Client of a Fund Manager and such securityis owned at law or in equity by the Fund Manager, or because such Person is anEstate Account or an Other Account of a Trust Company and such security isowned at law or in equity by the Trust Company, or because such Person is aPlan and such security is owned at law or in equity by the Plan Administrator;or

 

(ix)                              because such Person is the registered holder of securities as aresult of carrying on the business of, or acting as, a nominee of a securitiesdepositary.

 

For purposes of this Agreement, indetermining the percentage of the outstanding Voting Shares with respect towhich a Person is, or is deemed to be, the Beneficial Owner, any unissuedVoting Shares as to which such Person is deemed the Beneficial Owner pursuantto this Subsection 1.1(d) shall be deemed outstanding.

 

f)                                        “**Board ofDirectors**” shall mean the board of directors of the Corporation orany duly constituted and empowered committee thereof.

 

g)                                     “**Business Day**”****shall mean any day, other than a Saturday or**Sunday or a day on which banking institutions in Montreal,Quebec are authorized or obligated by law to close.

 

h)                                     “**CanadaBusiness Corporations Act**” shall mean the *CanadaBusiness Corporations Act* (Canada), R.S.C. 1985, c. C-44, as amendedand the regulations thereunder, as from time to time in effect.

 

i)                                         “**CanadianDollar Equivalent**” of any amount which is expressed in United Statesdollars shall mean on any date the Canadian dollarequivalent of such amount determined by reference to the U.S. - CanadianExchange Rate in effect on such date.

 

j)                                         “**Close ofBusiness**” on any given date shall mean the time on such date (or, ifsuch date is not a Business Day, the time on the next Business Day) at whichthe principal office of the transfer agent for the Shares in Montreal, Quebec(or after the Separation Time, the principal office of the Rights Agent inMontreal, Quebec) is closed to the public.

 

k)                                      “**ClosingPrice**” per security of any securities on any date of determinationshall mean:

 

(i)                                   the closing board lot sale price or, if such price is not available,the average of the closing bid and asked prices, for such securities on suchdate as reported by the stock exchange or national securities quotation systemon which such securities are listed or admitted to trading (provided that, ifat the date of determination such securities are listed or admitted to tradingon more than one stock exchange or national securities quotation system, suchprice or prices shall be determined based on the stock exchange or quotationsystem on which such securities are then listed or admitted to trading on whichthe largest number of such securities were traded during the most recentlycompleted calendar year or, if a calendar year has 

 

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not been completed prior to the date ofdetermination, during such shorter period as the Board of Directors acting ingood faith determines to be appropriate); or

 

(ii)                                if for any reason none of such prices is available on such date orthe securities are not listed or admitted to trading on a stock exchange or anational securities quotation system on such date, the last sale price, or incase no sale takes place on such date, the average of the high bid and lowasked prices for each of such securities in the over-the-counter market;

 

provided, however, that (A) if for anyreason none of such prices is available on such date, the “**ClosingPrice**” per security of such securities on such date shall mean thefair value per security of the securities on such date as determined at therequest of the Board of Directors by a nationally or internationally recognizedinvestment dealer or investment banker; and (B) if the Closing Price sodetermined is expressed in United States dollars, such amount shall beconverted to the Canadian Dollar Equivalent.

 

l)                                         “**CompetingPermitted Bid**” means a Take-over Bid that:

 

(i)                                   is made after a Permitted Bid has been made and prior to the expiryof the Permitted Bid;

 

(ii)                                satisfies all components of the definition of a Permitted Bid otherthan the requirement in subclause (ii)(A)(x) thereof; and

 

(iii)                              contains, and the take-up and payment for securities tendered ordeposited thereunder is subject to, irrevocable and unqualified conditions thatno Voting Shares shall be taken up or paid for pursuant to the Take-over Bidprior to the Close of Business on a date that is earlier than the later of (A) 35days (or such longer minimum period of days that a Take-over Bid must remainopen for acceptance under the Securities Act) after the date of the Take-overBid;  and (B) the 60th day after theearliest date on which any other Permitted Bid that is then in existence wasmade.

 

m)                                   “**controlled**”:  a body corporate is “controlled” by anotherPerson or two or more Persons acting jointly or in concert if and only if:

 

(i)                                     securities entitled to vote in the election of directors carryingmore than 50% of the votes for the election of directors are held, directly orindirectly, by or for the benefit of the other Person or two or more Personsacting jointly or in concert; and

 

(ii)                                  the votes carried by such securities are entitled, if exercised, toelect a majority of the board of directors of such body corporate;

 

and “**controls**”, “**controlling**” “**under common control with**”shall be interpreted accordingly.

 

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n)                                     “**ConvertibleSecurity**” means, with respect to any security, a securityconvertible into or exercisable or exchangeable for the first-mentionedsecurity including, without limitation, share purchase rights, exchange rights,options and warrants.

 

o)                                     “**Co-RightsAgents**” shall have the meaning ascribed thereto inSubsection 4.1(a).

 

p)                                     “**DispositionDate**” shall have the meaning ascribed thereto inSubsection 5.1(b).

 

q)                                     “**Effective Date**” shall mean the Close of Business on March 29, 2004, beingthe date upon which the Toronto Stock Exchange accepted notice for filing ofthe Original Agreement.

 

r)                                        “**Election toExercise**” shall have the meaning ascribed thereto in Subsection 2.2(d).

 

s)                                      “**ExemptAcquisition**” means a share acquisition (i) in respect of whichthe Board of Directors has waived the application of Section 3.1 pursuantto Subsection 5.1(b), 5.1(d) or 5.1(e) or (ii) pursuantto an amalgamation, merger or other statutory procedure requiring shareholderapproval.

 

t)                                        “**ExercisePrice**” shall mean, as of any date from and after the SeparationTime, the price at which a holder of a Right may purchase the securitiesissuable upon exercise of one whole Right which, subject to adjustment inaccordance with the terms hereof, shall be an aggregate dollar amount equal tothe Market Price per Share (determined as at the Separation Time) multiplied byfive (5).

 

u)                                     “**Expiration Time**” shall mean the earlier of: (i) theTermination Time; and (ii) the Close of Business on the date on which thefirst annual meeting of shareholders of the Corporation following March 29,2007 (being the third anniversary of the date of the Original Agreement) isheld; provided, however, that if the resolution referred to in Section 5.20is approved by the Independent Shareholders in accordance with Section 5.20at or prior to such annual meeting, “**Expiration Time**”shall mean the earlier of (A) the Termination Time; and (B) the Closeof Business on March 29, 2010, being the sixth anniversary of the date ofthe Original Agreement.

 

v)                                     “**Fiduciary**”shall mean, when acting in that capacity, a trust company registered under thetrust company legislation of Canada or any province thereof, a trust companyorganized under the laws of any state of the United States, a portfolio managerregistered under the securities legislation of one or more provinces of Canadaor an investment adviser registered under the United States Investment AdvisersAct of 1940 or any other securities legislation of the United States or anystate of the United States.

 

w)                                   “**Flip-in Event**”shall mean a transaction or event in or pursuant to which any Person becomes anAcquiring Person.

 

x)                                       “**holder**”shall have the meaning ascribed thereto in Section 2.8.

 

y)                                     “**IndependentShareholders**” shall mean holders of outstanding Voting Shares, otherthan Voting Shares Beneficially Owned by (i) any Acquiring Person orOfferor other than 

 

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a Person who is deemed not to Beneficially Own such Voting Shares byreason of clause 1.1e)(vi) hereof; (ii) any Person acting jointly or in concert withsuch Acquiring Person or Offeror; (iii) any Associate or Affiliate of suchAcquiring Person or Offeror; and (iv) any employee benefit plan, stockpurchase plan, deferred profit sharing plan and any similar plan or trust forthe benefit of employees of the Corporation or a corporation controlled by theCorporation, unless the beneficiaries of the plan or trust direct the manner inwhich the Voting Shares are to be voted or withheld from voting or directwhether the Voting Shares are to be tendered to a Take-over Bid.

 

z)                                       “**Lock-upAgreement**” means an agreement between an Offeror or any Affiliate orAssociate of an Offeror and one or more holders of Voting Shares (each suchholder herein referred to as a “**Locked-up Person**”)who are not Affiliates or Associates of the Offeror and who are not, other thanby virtue of entering into such agreement, acting jointly or in concert withthe Offeror, the terms of which are publicly disclosed and a copy of which ismade available to the public (including the Corporation) not later than thedate of the Lock-up Bid (as hereinafter defined) or, if the Lock-up Bid hasbeen made prior to the date of the****Lock-upAgreement, not later than the Business Day following the date the Lock-upAgreement was entered into, pursuant to which each Locked-up Person agrees todeposit or tender the Voting Shares held by such holder to a Take-over Bid (the“**Lock-up Bid**”) made by the Offeror orany Affiliates or Associates of the Offeror or any other Person acting jointlyor in concert with the Offeror provided that:

 

(i)                                    the Lock-up Agreement permits the Locked-up Person to withdraw itsVoting Shares from the Lock-up Agreement and the Lock-up Bid in order todeposit or tender the Voting Shares to another Take-over Bid or to supportanother transaction prior to the Voting Shares being taken up and paid forunder the Lock-up Bid:

 

(A)                            at a price or value per Voting Share that exceeds the price or valueper Voting Share offered under the Lock-up Bid; or

 

(B)                              for a number of Voting Shares that exceeds by as much as or morethan a number specified in the Lock-up Agreement (the “**SpecifiedNumber**”) the number of Voting Shares that the Offeror has offered topurchase under the Lock-up Bid at a price or value per Voting Share that is notless than the price or value per Voting Share offered under the Lock-up Bid,provided that the Specified Number is not greater than 7% of the number ofVoting Shares offered to be purchased under the Lock-up Bid; or

 

(C)                              at such price or value that exceeds by as much as or more than anamount specified in the Lock-up Agreement (the “**SpecifiedAmount**”) the offering price for each Voting Share contained in orproposed to be contained in the Lock-up Bid, provided that the Specified Amountis not greater than 7% of the offering price contained in or proposed to becontained in the Lock-up Bid;

 

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for greater certainty, the Lock-up Agreementmay contain a right of first refusal or require a period of delay to give thePerson who made the Lock-up Bid an opportunity to match a higher price inanother Take-over Bid or transaction or other similar limitation on a Locked-upPerson’s right to withdraw Voting Shares from the agreement, so long as thelimitation does not preclude the exercise by the Locked-up Person of the rightto withdraw Voting Shares during the period of the other Take-over Bid ortransaction; and

 

(ii)                                 no “break-up” fees, “topping” fees, penalties, expenses or otheramounts that exceed in aggregate the greater of:

 

(A)                              21⁄2% of the price or value of the aggregate consideration payableunder the Lock-up Bid to a Locked-up Person; and

 

(B)                               50% of the amount by which the price or value of the considerationreceived by a Locked-up Person under another Take-over Bid or transactionexceeds the price or value of the consideration that the Locked-up Person wouldhave received under the Lock-up Bid;

 

shall be payable by such Locked-up Person ifthe Locked-up Person fails to deposit or tender Voting Shares to the Lock-upBid, or withdraws Voting Shares previously tendered thereto, in order todeposit or tender such Voting Shares to another Take-over Bid or supportanother transaction.

 

aa)                                “**Market Price**”****per security of any securities on any date of determinationshall mean the average of the daily Closing Prices per security of suchsecurities on each of the 20 consecutive Trading Days through and including theTrading Day immediately preceding such date of determination; provided,however, that if an event of a type analogous to any of the events described inSection 2.3 hereof shall have caused any Closing Price used to determinethe Market Price on any Trading Day not to be fully comparable with the ClosingPrice on the Trading Day immediately preceding such date of determination, eachsuch Closing Price so used shall be appropriately adjusted in a manneranalogous to the applicable adjustment provided for in Section 2.3 hereof(as determined by the Board of Directors acting in good faith) in order to makeit fully comparable with the Closing Price on the Trading Day immediatelypreceding such date of determination.

 

bb)                              “**Nominee**”shall have the meaning ascribed thereto in Subsection 2.2(c).

 

cc)                                “**Offer toAcquire**” shall include:

 

(i)                                    an offer to purchase or a solicitation of an offer to sell VotingShares, or a public announcement of an intention to make such an offer orsolicitation; and

 

(ii)                                 an acceptance of an offer to sell Voting Shares, whether or not suchoffer to sell has been solicited;

 

or any combination thereof, and the Personaccepting an offer to sell shall be deemed to be making an Offer to Acquire tothe Person that made the offer to sell.

 

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dd)                              “**Offeror**”shall mean a Person who has announced a current intention to make, or who ismaking, a Take-over Bid.

 

ee)                                “**Offeror’sSecurities**” shall mean the Voting Shares Beneficially Owned on thedate of a Take-over Bid by an Offeror.

 

ff)                                    “**Original Agreement**” has the meaning ascribed thereto inrecital B to this Agreement.

 

gg)                              “**PermittedBid**” means a Take-over Bid made by way of a take-over bid circularwhich also complies with the following additional provisions:

 

(i)                                   the Take-over Bid is made to all holders of record of Voting Shares,other than the Offeror;

 

(ii)                                the Take-over Bid contains, and the take-up and payment forsecurities tendered or deposited thereunder is subject to, irrevocable andunqualified conditions that:

 

(A)                              no Voting Shares shall be taken up or paid for pursuant to theTake-over Bid (x) prior to the Close of Business on a date which is notless than 60 days following the date of the Take-over Bid and (y) unless,at the Close of Business on that date, the Voting Shares deposited or tenderedpursuant to the Take-over Bid and not withdrawn constitute more than 50% of theVoting Shares outstanding which are held by Independent Shareholders;

 

(B)                                unless the Take-over Bid is withdrawn, Voting Shares may bedeposited pursuant to such Take-over Bid at any time prior to the Close ofBusiness on the date of the first take-up of or payment for Voting Shares;

 

(C)                                any Voting Shares deposited pursuant to the Take-over Bid may bewithdrawn until taken up and paid for; and

 

(D)                               in the event that the requirement set forth in subclause (A)(y) ofthis clause 1.1gg)(ii) is satisfied, the Offeror will make a publicannouncement of that fact and the Take-over Bid will remain open for depositsand tenders of Voting Shares for not less than 10 Business Days from the dateof such public announcement.

 

For purposes of this Agreement, the term “**Permitted Bid**” shall include a Competing Permitted Bid.

 

hh)                              “**PermittedBid Acquisition**”  means anacquisition of Voting Shares made pursuant to a Permitted Bid.

 

ii)                                      “**Person**”includes any individual, firm, partnership, association, trust, trustee,executor, administrator, legal personal representative, government,governmental body or authority, corporation, or other incorporated orunincorporated organization, syndicate or other entity.

 

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jj)                                      “**Pro RataAcquisition**” means an acquisition by a Person of Voting Sharespursuant to (i) any dividend reinvestment plan, such purchase plan orother plan of the Corporation made available to all holders of Voting Shares(other than holders resident in any jurisdiction where participation in suchplan is restricted or impractical as a result of applicable law);  (ii) a stock dividend, a stock split orother event pursuant to which such Person becomes the Beneficial Owner ofVoting Shares on the same pro rata basis as all other holders of Voting Sharesof the same class or series; (iii) the acquisition or exercise of rightsto purchase Voting Shares distributed to all holders of Voting Shares (otherthan holders resident in any jurisdiction where such distribution or exerciseis restricted or impractical as a result of applicable law) by the Corporationpursuant to a rights offering (but only if such rights are acquired directlyfrom the Corporation); or (iv) a distribution of Voting Shares orConvertible Securities in respect thereof offered pursuant to a prospectus orby way of a private placement by the Corporation or a conversion or exchange ofany such Convertible Security, provided that, in the cases of (iii) and (iv) above,such Person does not thereby acquire a greater percentage of Voting Shares orConvertible Securities so offered than the Person’s percentage of Voting SharesBeneficially Owned immediately prior to such acquisition.

 

kk)                                “**Record Time**”means on the Close of Business on the Effective Date.

 

ll)                                      “**RedemptionPrice**” shall have the meaning attributed thereto inSubsection 5.1(a).

 

mm)                          “**Regular CashDividend**” means cash dividends paid on the Shares in any fiscal yearof the Corporation to the extent that such cash dividends do not exceed in theaggregate in any fiscal year the greatest of:

 
| (i)    |   | 200% of the aggregate amount of cash  dividends declared payable by the Corporation on its Shares in its  immediately preceding fiscal year;                                    |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                            |
| (ii)   |   | 300% of the arithmetic mean of the  aggregate amounts of cash dividends declared payable by the Corporation on  its Shares in its three immediately preceding fiscal years; and |
|   |   |                                                                                                                                                                            |
| (iii)  |   | 100% of the aggregate consolidated net  income of the Corporation, before extraordinary items, for its immediately  preceding fiscal year.                                      |

 

nn)                              “**Right**”****shall mean the rights described herein to purchasesecurities pursuant to the terms and subject to the conditions set forthherein.

 

oo)                              “**RightsCertificate**” shall mean the certificates representing the Rightsafter the Separation Time which shall be substantially in the form attachedhereto as Exhibit A.

 

pp)                              “**RightsRegister**” and “**Rights Registrar**”shall have the respective meanings ascribed thereto in Subsection 2.6(a).

 

qq)                              “**Securities Act**”shall mean the *Securities*Act, R.S.Q.,c. V-1.1, as amended and the regulations, rules and policy statementsmade thereunder, as from time to time in effect.

 

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rr)                                    “**SeparationTime**” means the Close of Business on the eighth Trading Day afterthe earlier of:

 

(i)                                   the Stock Acquisition Date; and

 

(ii)                                the date of the commencement of, or first public announcement ordisclosure of the intent of any Person (other than the Corporation or anycorporation controlled by the Corporation) to commence, a Take-over Bid (otherthan a Permitted Bid, so long as such Take-over Bid continues to satisfy therequirements of a Permitted Bid);

 

or such later Business Day as may bedetermined at any time or from time to time by the Board of Directors provided,however, that if any such Take-over Bid expires, is cancelled, is terminated oris otherwise withdrawn prior to the Separation Time, without securitiesdeposited thereunder being taken up and paid for, such Take-over Bid shall bedeemed, for purposes of this Subsection 1.1(pp), never to have been made,and, provided further, that if the Board of Directors determines, pursuant to Section 5.1,to waive the application of Section 3.1 to a Flip-in Event, the SeparationTime in respect of such Flip-in Event shall be deemed never to have occurred.

 

ss)                                “**Shares**”means the common shares in the share capital of the Corporation, as such sharesmay be subdivided, consolidated, reclassified or otherwise changed from time totime.

 

tt)                                    “**StockAcquisition Date**” shall mean the first date of public announcementor disclosure by the Corporation or an Acquiring Person of facts indicatingthat a Person has become an Acquiring Person (which, for the purposes of thisdefinition, shall include, without limitation, a report filed pursuant to Section 147.11of the Securities Act or Section 13(d) of the U.S. Exchange Actdisclosing such information).

 

uu)                              “**Take-overBid**” means an Offer to Acquire Voting Shares of any class, orConvertible Securities with respect thereto, where the Voting Shares subject tothe Offer to Acquire, together with the Voting Shares into or for which thesecurities subject to the Offer to Acquire are convertible or exchangeable andthe Offeror’s Securities constitute in the aggregate 20% or more of theoutstanding Voting Shares at the date of the Offer to Acquire.

 

vv)                              “**TerminationTime**”****means the time at which the rightto exercise Rights shall terminate pursuant to Section 5.1 hereof.

 

ww)                          “**Trading Day**”when used with respect to any securities, means the day on which the principalCanadian or United States securities exchange (as determined by the Board ofDirectors acting in good faith) on which such securities are listed or admittedto trading is open for the transaction of business or, if the securities arenot listed or admitted to trading on any Canadian or United States securitiesexchange, a Business Day.

 

xx)           “**U.S. - Canadian ExchangeRate**” on any date shall mean:

 

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(i)                                    if on such date the Bank of Canada sets an average noon spot rate ofexchange for the conversion of one United States dollar into Canadian dollars,such rate; and

 

(ii)                                 in any other case, the rate for such date for the conversion of oneUnited States dollar into Canadian dollars which is calculated in the mannerwhich shall be determined by the Board of Directors from time to time acting ingood faith;

 

yy)                              “**U.S.Exchange Act**” means the United States Securities Exchange Act of1934, as amended, and the rules and regulations thereunder as from time totime in effect.

 

zz)                                  “**Voting ShareReduction**” means an acquisition or redemption by the Corporation orany corporation controlled by the Corporation of Voting Shares which, byreducing the number of Voting Shares outstanding, increases the percentage ofVoting Shares Beneficially Owned by any Person to 20% or more of the VotingShares then outstanding.

 

aaa)                          “**VotingShares**” means the Shares and any other securities the holders ofwhich are entitled to vote generally on the election of directors of theCorporation, and “**voting shares**”,when used with reference to any Person other than the Corporation, means common shares of suchother Person and any other securities the holders of which are entitled to votegenerally on the election of the directors of such other Person.

 

**1.2**                               Currency

** **

All sums of money which are referred to inthis Agreement are expressed in lawful money of Canada, unless otherwisespecified.

 

**1.3**                               Number and Gender

** **

Wherever the context will require, terms(including defined terms) used herein importing the singular number only shallinclude the plural and vice versa and words importing any one gender shallinclude all others.

 

**1.4**                               Sections and Headings

** **

The division of this Agreement into Articles,Sections, Subsections, clauses and subclauses and the insertion of headings arefor convenience of reference only and shall not affect the construction orinterpretation of this Agreement. The terms this “**Agreement**”,“**hereunder**”, “**hereof**”and similar expressions refer to this Agreement as amended or supplemented fromtime to time and not to any particular Article, Section or other portionhereof and include any agreement or instrument supplemental or ancillaryhereto. Unless something in the subject matter or context is inconsistenttherewith, references herein to Articles, Sections, Subsections, clauses andsubclauses are to Articles, Sections, Subsections, clauses and subclauses ofthis Agreement.

 

**1.5**                               Statutory References

** **

Unless the context otherwise requires, anyreference to a specific Section, Subsection, clause or Rule of any statuteor regulation shall be deemed to refer to the same as it may be amended, 

 

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reenacted or replaced or, if repealed andthere shall be no replacement therefor, to the same as it is in effect on thedate of this Agreement.

 

**1.6**                               Determination of PercentageOwnership

** **

The percentage of Voting Shares BeneficiallyOwned by any Person, shall, for the purposes of this Agreement, be and bedeemed to be the product determined by the formula:

 
| 100 x  |   | A |   |
|--------|--------|---|--------|
|   |   | B |

 

where:

 

A =                          the aggregate number of votes for the election of all directorsgenerally attaching to the Voting Shares Beneficially Owned by suchPerson;  and

 

B =                            the aggregate number of votes for the election of all directorsgenerally attaching to all outstanding Voting Shares.

 

Where any Person is deemed to BeneficiallyOwn unissued Voting Shares pursuant to Subsection 1.1e), such VotingShares shall be deemed to be outstanding for the purpose of both A and B in theformula above.

 

**1.7**                               Acting Jointly or in Concert

** **

For the purposes of this Agreement, a Personis acting jointly or in concert with every Person who is a party to anagreement, commitment or understanding, whether formal or informal and whetheror not in writing, with the first Person, to acquire or to Offer to AcquireVoting Shares or Convertible Securities in respect thereof (other thancustomary agreements with and between underwriters and banking group or sellinggroup members with respect to a distribution of securities or pursuant to apledge of securities in the ordinary course of the pledgee’s business).

 

**ARTICLE 2THE RIGHTS**

** **

**2.1**                             Legend on Share Certificates

** **

a)            Certificatesrepresenting the Shares, including without limitation Shares issued upon theconversion of Convertible Securities, issued after the Record Time but prior tothe Close of Business on the earlier of the Separation Time and the ExpirationTime shall also evidence one Right for each Share represented thereby and shallhave impressed on, printed on, written on or otherwise affixed to them thelegend set forth in the Original Agreement (which legend shall be deemed forall purposes to be amended to read the same as set forth below), but Share certificatesissued after the Amendment Date but prior to the Close of Business on theearlier of the Separation Time and the Expiration Time shall have impressed on,printed on, written on or otherwise affixed to them the following legend:

 

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“Until the Separation Time (as defined in theRights Agreement referred to below), this certificate also evidences andentitles the holder hereof to certain Rights as set forth in an Amended andRestated Shareholder Rights Plan Agreement, dated as of March 5, 2007 (the “RightsAgreement”), between the Corporation and Computershare Trust Company of Canada,as rights agent, as the same may be amended or supplemented from time to timein accordance with the terms thereof, the terms of which are herebyincorporated herein by reference and a copy of which is on file at theregistered office of the Corporation. Under certain circumstances, as set forthin the Rights Agreement, such Rights may be amended or redeemed, may expire,may become void (if, in certain cases, they are “Beneficially Owned” by an “AcquiringPerson”, as such terms are defined in the Rights Agreement, whether currentlyheld by or on behalf of such Person or any subsequent holder) or may beevidenced by separate certificates and may no longer be evidenced by thiscertificate. The Corporation will mail or arrange for the mailing of a copy ofthe Rights Agreement to the holder of this certificate without charge as soonas practicable after the receipt of a written request therefor.

 

Jusqu’à l’heure de séparation(définie dans la convention visant les Droits mentionnée ci-dessous), leprésent certificat atteste également que son porteur jouit de certains Droitsstipulés dans une convention visant un régime de droits de souscription desactionnaires modifiée et mise à jour intervenue en date du 5 mars 2007(« convention visant les Droits ») entre la Société et Société de fiducie Computershare du Canada, à titre d’agent des Droits, en sa versionpouvant être modifiée ou complétée de temps à autre conformément aux modalitésdes présentes, convention dont les conditions sont intégrées dans les présentespar renvoi et dont une copie se trouve dans les dossiers tenus au siège socialde la Société. Dans certaines circonstances stipulées dans la convention visantles Droits, ces Droits peuvent être modifiés ou rachetés ou peuvent expirer oudevenir nuls (si, dans certains cas, ils sont « détenus à titre devéritable propriétaire » par une « personne faisant uneacquisition », selon la définition de ces termes dans la convention visantles Droits, qu’ils soient détenus actuellement par cette personne ou un porteurultérieur ou pour le compte de ceux-ci). Les Droits peuvent aussi être attestéspar des certificats distincts et peuvent ne plus être attestés par le présentcertificat. La Société postera ou fera poster sans frais une copie de laconvention visant les Droits au porteur du présent certificat dès que possibleaprès la réception d’une demande écrite à cet effet.”

 

b)                                    Certificatesrepresenting Shares that have been issued prior to, and remain outstanding at,the Record Time or the Amendment Date, as the case may be, shall evidence oneRight for each Share evidenced thereby until the earlier of the Separation Timeand the Expiration Time notwithstanding the absence of the legend required bySubsection 2.1a).

 

**2.2**                               Initial Exercise Price; Exercise ofRights; Detachment of Rights

** **

a)                                     Subject to adjustment as herein setforth, including without limitation as set forth in Article 3, each Rightwill entitle the holder thereof, from and after the Separation Time and priorto the Expiration Time, to purchase one Share for the Exercise Price (whichExercise Price and number of Shares are subject to adjustment as set forthbelow). Notwithstanding any other provision of this Agreement, any Rights heldby the Corporation or any of its subsidiaries shall be void.

 

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b)                                    Until the Separation Time, (i) theRights shall not be exercisable and no Right may be exercised; and (ii) foradministrative purposes, each Right will be evidenced by the certificate forthe associated Shares registered in the name of the holder thereof (whichcertificate shall be deemed to represent a Rights Certificate) and will betransferable only together with, and will be transferred by a transfer of, suchassociated Shares.

 

c)                                    From and after the Separation Timeand prior to the Expiration Time, the Rights may be exercised, and theregistration and transfer of the Rights shall be separate from and independentof Shares. Promptly following the Separation Time, the Corporation will prepareor cause to be prepared and the Rights Agent will mail to each holder of recordof Shares as of the Separation Time and, in respect of each ConvertibleSecurity converted into Shares after the Separation Time and prior to theExpiration Time, promptly after such conversion, the Corporation will prepareor cause to be prepared and the Rights Agent will mail to the holder soconverting (other than in each case an Acquiring Person and, in respect of anyRights Beneficially Owned by such Acquiring Person which are not held of recordby such Acquiring Person, the holder of record of such rights (a “**Nominee**”)) at such holder’s address as shown by the recordsof the Corporation (the Corporation hereby agreeing to furnish copies of suchrecord to the Rights Agent for this purpose):

 

(i)                                    a Rights Certificate in substantially the form of Exhibit Ahereto appropriately completed, representing the number of Rights held by suchholder at the Separation Time and having such marks of identification ordesignation and such legends, summaries or endorsements printed thereon as theCorporation may deem appropriate and as are not inconsistent with theprovisions of this Agreement, or as may be required to comply with any law, rule orregulation or judicial or administrative order, or with any article,requirement or regulation of any stock exchange or quotation system on whichthe Rights may from time to time be listed or traded, or to conform to usage;and

 

(ii)                                 a disclosure statement prepared by the Corporation describing theRights;

 

provided that a Nominee shall be sent thematerials provided for in (i) and (ii) only in respect of all Sharesheld of record by it which are not Beneficially Owned by an Acquiring Personand the Corporation may require any Nominee or suspected Nominee to providesuch information and documentation as the Corporation may reasonably requirefor such purpose.

 

d)                                    Rights may be exercised in whole orin part on any Business Day after the Separation Time and prior to theExpiration Time by submitting to the Rights Agent at its principal office inMontreal, Quebec, or any other office of the Rights Agent designated for thatpurpose from time to time by the Corporation:

 

(i)                                    the Rights Certificate evidencing such Rights;

 

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(ii)                                 an election to exercise (an “**Election to Exercise**”)substantially in the form attached to the Rights Certificate duly completed andexecuted in a manner acceptable to the Rights Agent; and

 

(iii)                              payment by certified cheque, banker’s draft or money order payableto the order of the Rights Agent, or by wire transfer to an account designatedby the Rights Agent, of a sum equal to the Exercise Price multiplied by thenumber of Rights being exercised and a sum sufficient to cover any transfer taxor charge which may be payable in respect of any transfer involved in thetransfer or delivery of Rights Certificates or the issuance or delivery ofcertificates for Shares in a name other than that of the holder of the Rightsbeing exercised.

 

e)                                     Upon receipt of a RightsCertificate, which is accompanied by an appropriately completed and dulyexecuted Election to Exercise (which does not indicate that such Right is nulland void as provided by Subsection 3.1(b)) and payment as set forth inSubsection 2.2(d), the Rights Agent (unless otherwise instructed by theCorporation) will thereupon promptly:

 
| (i)    |   | requisition from the transfer agent of the  Shares certificates representing the number of Shares to be purchased (the  Corporation hereby irrevocably authorizing its transfer agent to comply with  all such requisitions); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                          |
| (ii)   |   | after receipt of such share certificates,  deliver such certificates to, or to the order of, the registered holder of  such Rights Certificate, registered in such name or names as may be  designated by such holder;        |
|   |   |                                                                                                                                                                                                                          |
| (iii)  |   | when appropriate, requisition from the  Corporation the amount of cash, if any, to be paid in lieu of issuing  fractional Shares;                                                                                             |
|   |   |                                                                                                                                                                                                                          |
| (iv)   |   | when appropriate, after receipt of such  cash, deliver such cash to, or to the order of, the registered holder of the  Rights Certificate; and                                                                                |
|   |   |                                                                                                                                                                                                                          |
| (v)    |   | tender to the Corporation all payments  received on exercise of the Rights.                                                                                                                                                   |

 

f)                                       If the holder of any Rights shallexercise less than all of the Rights evidenced by such holder’s RightsCertificate, a new Rights Certificate evidencing the Rights remainingunexercised will be issued by the Rights Agent to such holder or to such holder’sduly authorized assigns.

 

g)                                   The Corporation shall:

 

(i)                                    take all such action as may be necessary and within its power toensure that all Shares delivered upon the exercise of Rights shall, at the timeof delivery of the certificates for such Shares (subject to payment of theExercise Price), be duly and validly authorized, executed, issued and deliveredas fully paid and non-assessable;

 

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(ii)                               take all such action as may reasonably be considered to be necessaryand within its power to comply with any applicable requirements of the CanadaBusiness Corporations Act, the Securities Act, the U.S. Exchange Act, theUnited States Securities Act of 1933, as amended, and applicable comparablelegislation of each of the provinces and territories of Canada and states ofthe United States of America, or the rules and regulations thereunder orany other applicable law, rule or regulation, in connection with theissuance and delivery of the Rights, the Rights Certificates and the issuanceof any Shares upon exercise of the Rights;

 

(iii)                            use reasonable efforts to cause all Shares issued upon exercise ofthe Rights to be listed on the stock exchanges on which the Shares are listedat that time;

 

(iv)                           cause to be reserved and kept available out of its authorized andunissued Shares, the number of Shares that, as provided in this Agreement, willfrom time to time be sufficient to permit the exercise in full of alloutstanding Rights;

 

(v)                              pay when due and payable, if applicable, any and all federal,provincial, state and municipal taxes (not in the nature of income, capitalgains or withholding taxes) and charges which may be payable in respect of theoriginal issuance or delivery of the Rights Certificates or certificates forShares issued upon the exercise of Rights, provided****thatthe Corporation shall not be required to pay any transfer tax or charge whichmay be payable in respect of any transfer of Rights or the issuance or deliveryof certificates for Shares issued upon the exercise of Rights, in a name otherthan that of the holder of the Rights being transferred or exercised; and

 

(vi)                           after the Separation Time, except as permitted by Section 5.1or Section 5.4, not take (or permit any corporation it controls to take)any action if at the time such action is taken it is reasonably foreseeablethat such action will diminish substantially or otherwise eliminate the benefitsintended to be afforded by the Rights.

 

**2.3**                             Adjustments to Exercise Price;Number of Rights

** **

a)                                    The Exercise Price, the number andkind of securities subject to purchase upon exercise of each Right and thenumber of Rights outstanding are subject to adjustment from time to time asprovided in this Section 2.3 and in Article 3. Fractional interestsin securities resulting from such adjustments are subject to Section 5.5.

 

b)                                   In the event that the Corporationshall at any time after the Record Time and prior to the Expiration Time:

 

(i)                                    declare or pay a dividend on the Shares payable in Voting Shares orConvertible Securities in respect thereof other than pursuant to any dividendreinvestment plan or program;

 

(ii)                                 subdivide or change the then outstanding Shares into a greaternumber of Shares;

 

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(iii)                              consolidate, combine or change the then outstanding Shares into asmaller number of Shares; or

 

(iv)                             issue any Voting Shares (or Convertible Securities in respectthereof) in respect of, in lieu of, or in exchange for existing Shares, whetherin a reclassification, amalgamation, statutory arrangement, consolidation orotherwise;

 

the Exercise Price and the number of Rightsoutstanding (or, if the payment or effective date therefor shall occur afterthe Separation Time, the securities purchasable upon the exercise of Rights)shall be adjusted as follows:

 

(A)                          If the Exercise Price and number of Rights outstanding are to beadjusted:

 

(x)                              the Exercise Price in effect after such adjustment will be equal tothe Exercise Price in effect immediately prior to such adjustment divided bythe number of Shares (or other securities of the Corporation) that a holder ofone Shares immediately prior to such dividend, subdivision, change,consolidation or issuance would hold thereafter as a result thereof; and

 

(y)                            each Right held prior to such adjustment will become that number ofRights equal to that number that is equal to the number of Shares (or othersecurities of the Corporation) that a holder of one Shares immediately prior tosuch dividend, subdivision, change, consolidation or issuance would holdimmediately thereafter as a result thereof, and the adjusted number of Rightswill be deemed to be allocated among the Shares with respect to which theoriginal Rights were associated (if they remain outstanding) and the securitiesof the Corporation issued in respect of such dividend, subdivision, change,consolidation or issuance, so that each such Shares (or other security of theCorporation) will have exactly one Right associated with it.

 

(B)                            If the securities purchasable upon exercise of Rights are to beadjusted, the securities purchasable upon exercise of each Right after suchadjustment will be the securities that a holder of the securities purchasableupon exercise of one Right immediately prior to such dividend, subdivision,change, consolidation or issuance would hold thereafter as a result thereof.

 

c)                                    Adjustments pursuant to Subsection 2.3(b)shall be made successively, whenever an event referred to in Subsection 2.3(b) occurs.

 

d)                                   If an event occurs which wouldrequire an adjustment under both this Section 2.3 and Section 3.1hereof, the adjustment provided for in this Section 2.3 shall be inaddition to, and shall be made prior to, any adjustment required pursuant to Section 3.1hereof.

 

e)                                    In the event the Corporation shallat any time after the Record Time and prior to the Expiration Time issue anyShares otherwise than in a transaction referred to in 

 

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Subsection 2.3(b), each such Share soissued shall automatically have one new Right associated with it, which Rightshall be evidenced by the certificate representing such Shares.

 

f)                                      In the event the Corporation shall,at any time after the Record Time and prior to the Expiration Time, fix arecord date for the making of a distribution to all holders of Shares of rightsor warrants entitling them (for a period expiring within 45 calendar days aftersuch record date) to subscribe for or purchase Shares (or ConvertibleSecurities in respect of Shares) at a price per Share (or, in the case of sucha Convertible Security, having a conversion, exchange or exercise price pershare (including the price required to be paid to purchase such ConvertibleSecurity)) less than 90% of the Market Price per Share on such record date, theExercise Price in effect after such record date will equal the Exercise Pricein effect immediately prior to such record date multiplied by a fraction;

 

(i)                                    of which the numerator shall be the number of Shares outstanding onsuch record date plus the number of Shares which the aggregate offering priceof the total number of Shares so to be offered (and/or the aggregate initialconversion, exchange or exercise price of the Convertible Securities so to beoffered (including the price required to be paid to purchase such ConvertibleSecurities)) would purchase at such Market Price per Share; and

 

(ii)                                 of which the denominator shall be the number of Shares outstandingon such record date plus the number of additional Shares to be offered forsubscription or purchase (or into which the Convertible Securities so to beoffered are initially convertible, exchangeable or exercisable).

 

In case such subscription price is satisfied,in whole or in part, by consideration other than cash, the value of suchconsideration shall be as determined in good faith by the Board of Directors.Such adjustment shall be made successively whenever such a record date is fixed.To the extent that such rights or warrants are not exercised prior to theexpiration thereof, the Exercise Price shall be readjusted in the mannercontemplated above based on the number of Shares (or securities convertibleinto or exchangeable for Shares) actually issued on the exercise of such rightsor warrants.

 

For purposes of this Agreement, the grantingof the right to purchase Shares (whether from treasury or otherwise) pursuantto any dividend or interest reinvestment plan or program or any share purchaseplan or program providing for the reinvestment of dividends or interest payableon securities of the Corporation or the investment of periodic optionalpayments or employee benefit or similar plans (so long as such right topurchase is in no case evidenced by the delivery of rights or warrants by theCorporation) shall not be deemed to constitute an issue of rights or warrantsby the Corporation; provided, however, that in the case of any dividend orinterest reinvestment or share purchase plan or program, the right to purchaseShares is at a price per share of not less than 90% of the current Market Priceper share (determined as provided in such plans) of the Shares.

 

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g)                                   In the event the Corporation shall,at any time after the Record Time and prior to the Expiration Time, fix arecord date for the making of a distribution to all holders of Shares of (i) evidencesof indebtedness or assets (other than a Regular Cash Dividend or a dividendpaid in Shares, but including any dividend payable in securities other thanShares), (ii) rights or warrants entitling them to subscribe for orpurchase Voting Shares (or Convertible Securities in respect of Voting Shares),at a price per Voting Share (or, in the case of a Convertible Security inrespect of Voting Shares, having a conversion, exchange or exercise price pershare (including the price required to be paid to purchase such ConvertibleSecurity)) less than 90% of the Market Price per Share on such record date(excluding rights or warrants referred to in Subsection 2.3(f)) or (iii) othersecurities of the Corporation, the Exercise Price in effect after such recorddate shall be equal to the Exercise Price in effect immediately prior to suchrecord date less the fair market value (as determined in good faith by theBoard of Directors) of the portion of the assets, evidences of indebtedness,rights or warrants or other securities so to be distributed applicable to eachof the securities purchasable upon exercise of one Right. Such adjustment shallbe made successively whenever such a record date is fixed.

 

h)                                   Each adjustment made pursuant to Section 2.3shall be made as of

 

(i)                                    the payment or effective date for the applicable dividend,subdivision, change, consolidation or issuance, in the case of an adjustmentmade pursuant to Subsection 2.3(b) above; and

 

(ii)                                 the record date for the applicable dividend or distribution, in thecase of an adjustment made pursuant to Subsections 2.3(f) or 2.3(g) above,subject to readjustment to reverse the same if such distribution shall not bemade.

 

i)                                       In the event the Corporation shall,at any time after the Record Time and prior to the Expiration Time, issue anyshares (other than Shares), or rights or warrants to subscribe for or purchaseany such shares, or Convertible Securities in respect of any such shares, in atransaction referred to in any of clauses 2.3(b)(i) to (iv),Subsection 2.3(f) or Subsection 2.3(g) above, if the Boardof Directors acting in good faith determines that the adjustments contemplatedby Subsections 2.3(b), 2.3(f) and 2.3(g) above in connectionwith such transaction would not appropriately protect the interests of theholders of Rights, the Board of Directors may from time to time acting in goodfaith determine what other adjustments, if any, to the Exercise Price, numberof Rights or securities purchasable upon exercise of Rights would beappropriate in the circumstances, if any, and such other adjustments (if any)shall be made upon the Board of Directors providing written certificationthereof to the Rights Agent pursuant to Subsection 2.3(q) and noadjustments contemplated by Subsections 2.3(b), 2.3(f) or 2.3(g) shallbe made notwithstanding the terms thereof. The Corporation and the Rights Agentshall amend this Agreement in accordance with Section 5.4 to provide forany such other adjustments contemplated by this Subsection 2.3(i).

 

j)                                       Notwithstanding anything herein tothe contrary, no adjustment of the Exercise Price shall be required unless suchadjustment would require an increase or decrease of at least 1% in suchExercise Price; provided, however, that any adjustments which by reason of 

 

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this Subsection 2.3(j) are notrequired to be made shall be carried forward and taken into account in anysubsequent adjustment. All adjustments to the Exercise Price made pursuant tothis Section 2.3 shall be calculated to the nearest cent.

 

k)                                    All Rights originally issued by theCorporation subsequent to any adjustment made to the Exercise Price hereundershall evidence the right to purchase, at the adjusted Exercise Price, thenumber of Shares purchasable from time to time hereunder upon exercise of theRights, all subject to further adjustment as provided herein.

 

l)                                       Unless the Corporation shall haveexercised its election as provided in Subsection 2.3(m) to adjust thenumber of Rights in lieu of any adjustment in the number of Shares purchasableupon the exercise of a Right, upon each adjustment of the Exercise Price as aresult of the calculations made in Subsections 2.3(f) and 2.3(g),each Right outstanding immediately prior to the making of such adjustment shallthereafter evidence the right to purchase, at the adjusted Exercise Price, thatnumber of Shares obtained by:

 

(i)                                    multiplying (A) the number of Shares covered by a Rightimmediately prior to such adjustment, by (B) the Exercise Price in effectimmediately prior to such adjustment; and

 

(ii)                                 dividing the product so obtained by the Exercise Price in effectimmediately after such adjustment.

 

m)                                 The Corporation may elect on orafter the date of any adjustment of the Exercise Price to adjust the number ofRights, in lieu of any adjustment in the number of Shares purchasable upon theexercise of a Right. Each of the Rights outstanding after the adjustment in thenumber of Rights shall be exercisable for the number of Shares for which aRight was exercisable immediately prior to such adjustment. Each Right held ofrecord prior to such adjustment of the number of Rights shall become the numberof Rights obtained by dividing the relevant Exercise Price in effectimmediately prior to adjustment of the relevant Exercise Price****by the relevant Exercise Price in effect immediately afteradjustment of the relevant Exercise Price. The Corporation shall make a publicannouncement of its election to adjust the number of Rights pursuant to thisSubsection 2.3(m), indicating the record date for the adjustment; and, ifknown at the time, the amount of the adjustment to be made. This record datemay be the date on which the relevant Exercise Price is adjusted or any daythereafter, but, if the Rights Certificates have been issued, shall be at least10 calendar days later than the date of the public announcement. If RightsCertificates have been issued, upon each adjustment of the number of Rightspursuant to this Subsection 2.3(m), the Corporation shall, as promptly aspracticable, cause to be distributed to holders of record of RightsCertificates on such record date, Rights Certificates evidencing, subject to Section 5.5,the additional Rights to which such holders shall be entitled as a result ofsuch adjustment, or, at the option of the Corporation, shall cause to bedistributed to such holders of record in substitution and replacement for theRights Certificates held by such holders prior to the date of adjustment, andupon surrender thereof, if required by the Corporation, new Rights Certificatesevidencing all the Rights to which such holders shall be entitled after suchadjustment. Rights Certificates so to be distributed shall be issued, executedand 

 

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countersigned in the manner provided forherein and may bear, at the option of the Corporation, the relevant adjustedExercise Price and shall be registered in the names of holders of record ofRights Certificates on the record date specified in the public announcement.

 

n)                                   In any case in which this Section 2.3shall require that an adjustment in an Exercise Price be made effective as of arecord date for a specified event, the Corporation may elect to defer until theoccurrence of such event the issuance to the holder of any Right exercisedafter such record date of the number of Shares and other securities of the Corporation,if any, issuable upon such exercise over and above the number of Shares andother securities of the Corporation, if any, issuable upon such exercise on thebasis of the relevant Exercise Price in effect prior to such adjustment;provided, however, that the Corporation shall deliver to such holder anappropriate instrument evidencing such holder’s right to receive suchadditional Shares (fractional or otherwise) or other securities upon theoccurrence of the event requiring such adjustment.

 

o)                                   Notwithstanding anything in this Section 2.3to the contrary, the Corporation shall be entitled to make such adjustments inthe Exercise Price, in addition to those adjustments expressly required by thisSection 2.3, as and to the extent that in its good faith judgment theBoard of Directors shall determine to be advisable in order that any (i) subdivisionor consolidation of the Shares, (ii) issuance wholly for cash of anyShares at less than the applicable Market Price, (iii) issuance wholly forcash of any Shares or securities that by their terms are exchangeable for orconvertible into or give a right to acquire Shares, (iv) stock dividends,or (v) issuance of rights, options or warrants referred to in this Section 2.3,hereafter made by the Corporation to holders of its Shares, shall not betaxable to such shareholders.

 

p)                                   Irrespective of any adjustment orchange in the securities purchasable upon exercise of the Rights, the RightsCertificates theretofore and thereafter issued may continue to represent thesecurities so purchasable which were represented in the initial RightsCertificates issued hereunder.

 

q)                                   Whenever an adjustment to theExercise Price is made pursuant to this Section 2.3, the Corporation shall

 

(i)                                    promptly prepare a certificate setting forth such adjustment and abrief statement of the facts accounting for such adjustment; and

 

(ii)                                 promptly file with the Rights Agent and with each transfer agent forthe Shares a copy of such certificate and mail a brief summary thereof to eachholder of Rights who requests a copy.

 

Failure to file such certificate or to causesuch notice to be given as aforesaid, or any defect therein, shall not affectthe validity of any such adjustment or change.

 

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** **

**2.4**                               Date on which Exercise is Effective

** **

Each Person in whose name any certificate forShares is issued upon the exercise of Rights shall for all purposes be deemedto have become the holder of record of the Shares represented thereby on, andsuch certificate shall be dated, the date upon which the Rights Certificateevidencing such Rights was duly surrendered (together with a duly completedElection to Exercise) and payment of the Exercise Price for such Rights (andany applicable transfer taxes and other governmental charges payable by theexercising Person hereunder) was made; provided, however, that if the date ofsuch surrender and payment is a date upon which the transfer books of theCorporation’s Shares are closed, such Person shall be deemed to have become therecord holder of such shares on, and such certificate shall be dated, the nextBusiness Day on which the Shares transfer books of the Corporation are open.

 

**2.5****                            ****Execution, Authentication,Delivery and Dating of Rights Certificates**

** **

a)                                    The Rights Certificates shall beexecuted on behalf of the Corporation by any two officers of the Corporation. Thesignature of any of these officers on the Rights Certificates may be manual orfacsimile. Rights Certificates bearing the manual or facsimile signatures ofindividuals who were at any time the proper officers of the Corporation shallbind the Corporation, notwithstanding that such individuals or any of them haveceased to hold such offices prior to the countersignature and delivery of suchRights Certificates.

 

b)                                   Promptly following the SeparationTime, the Corporation will notify the Rights Agent of such Separation Time andwill deliver Rights Certificates executed by the Corporation to the RightsAgent for countersignature and a statement describing the Rights, and theRights Agent shall countersign manually (or by facsimile signature in a mannersatisfactory to the Corporation) and deliver such Rights Certificates andstatement to the holders of the Rights pursuant to Section 2.2 hereof. NoRights Certificate shall be valid for any purpose until countersigned by theRights Agent as aforesaid.

 

c)                                    Each Rights Certificate shall bedated the date of countersignature thereof.

 

**2.6****                            ****Registration, Transfer andExchange**

** **

a)                                    After the Separation Time, theCorporation shall cause to be kept a register (the “**RightsRegister**”) in which, subject to such reasonable regulations as itmay prescribe, the Corporation will provide for the registration and transferof Rights. The Rights Agent is hereby appointed “**Rights Registrar**”for the purpose of maintaining the Rights Register for the Corporation andregistering Rights and transfers of Rights as herein provided and the RightsAgent hereby accepts such appointment. In the event that the Rights Agent shallcease to be the Rights Registrar, the Rights Agent will have the right toexamine the Rights Register at all reasonable times.

 

b)                                   After the Separation Time and priorto the Expiration Time, upon surrender for registration of transfer or exchangeof any Rights Certificate, and subject to the provisions ofSubsections 2.6(d) and 3.1(b) below, the Corporation willexecute, and the Rights Agent will countersign, deliver and register, in thename of the holder or the designated transferee or transferees, as requiredpursuant to the holder’s instructions, one 

 

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or more new Rights Certificates evidencingthe same aggregate number of Rights as did the Rights Certificates sosurrendered.

 

c)                                    All Rights issued upon anyregistration of transfer or exchange of Rights Certificates shall be validobligations of the Corporation, and such Rights shall be entitled to the samebenefits under this Agreement as the Rights surrendered upon such registrationof transfer or exchange.

 

d)                                   Every Rights Certificate surrenderedfor registration of transfer or exchange shall be duly endorsed, or beaccompanied by a written instrument of transfer in form satisfactory to theCorporation or the Rights Agent, as the case may be, duly executed by the holderthereof or such holder’s attorney duly authorized in writing. As a condition tothe issuance of any new Rights Certificate under this Section 2.6, theCorporation may require the payment of a sum sufficient to cover any tax orother governmental charge that may be imposed in relation thereto and any otherexpenses (including the fees and expenses of the Rights Agent) in connectiontherewith.

 

**2.7**                               Mutilated, Lost, Stolen andDestroyed Rights Certificates

** **

a)                                    If any mutilated Rights Certificateis surrendered to the Rights Agent prior to the Expiration Time, theCorporation shall execute and the Rights Agent shall countersign and deliver inexchange therefor a new Rights Certificate evidencing the same number of Rightsas did the Rights Certificate so surrendered.

 

b)                                   If there shall be delivered to theCorporation and the Rights Agent prior to the Expiration Time: (i) evidenceto their reasonable satisfaction of the destruction, loss or theft of anyRights Certificate; and (ii) such security or indemnity as may bereasonably required by them to save each of them and any of their agentsharmless, then, in the absence of notice to the Corporation or the Rights Agentthat such Rights Certificate has been acquired by a bona fide purchaser, theCorporation shall execute and, upon the Corporation’s request the Rights Agentshall countersign and deliver, in lieu of any such destroyed, lost or stolenRights Certificate, a new Rights Certificate evidencing the same number ofRights as did the Rights Certificate so destroyed, lost or stolen.

 

c)                                    As a condition to the issuance ofany new Rights Certificate under this Section 2.7, the Corporation mayrequire the payment of a sum sufficient to cover any tax or other governmentalcharge that may be imposed in relation thereto and any other expenses(including the fees and expenses of the Rights Agent) connected therewith.

 

d)                                   Every new Rights Certificate issuedpursuant to this Section 2.7 in lieu of any destroyed, lost or stolenRights Certificate shall evidence a contractual obligation of the Corporation,whether or not the destroyed, lost or stolen Rights Certificate shall be at anytime enforceable by anyone, and shall be entitled to all the benefits of thisAgreement equally and proportionately with any and all other Rights duly issuedhereunder.

 

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**2.8**                               Persons Deemed Owners

** **

TheCorporation, the Rights Agent and any agent of the Corporation or the RightsAgent may deem and treat the Person in whose name a Rights Certificate (or,prior to the Separation Time, the associated share certificate representing theShares) is registered as the absolute owner thereof and of the Rights evidencedthereby for all purposes whatsoever. As used in this Agreement, unless thecontext otherwise requires, the term “**holder**” of anyRights shall mean the registered holder of such Rights (or, prior to theSeparation Time, the associated Shares).

 

**2.9**                               Delivery and Cancellation ofCertificates

** **

AllRights Certificates surrendered upon exercise or for redemption, forregistration of transfer or for exchange shall, if surrendered to any Personother than the Rights Agent, be delivered to the Rights Agent and, in any case,shall be promptly cancelled by the Rights Agent. The Corporation may at anytime deliver to the Rights Agent for cancellation any Rights Certificatespreviously countersigned and delivered hereunder which the Corporation may haveacquired in any manner whatsoever, and all Rights Certificates so deliveredshall be promptly cancelled by the Rights Agent. No Rights Certificate shall becountersigned in lieu of or in exchange for any Rights Certificates cancelledas provided in this Section 2.9 except as expressly permitted by thisAgreement. The Rights Agent shall, subject to applicable law, destroy allcancelled Rights Certificates and deliver a certificate of destruction to theCorporation.

 

**2.10**                        Agreement of Rights Holders

** **

Everyholder of Rights, by accepting such Rights, consents and agrees with theCorporation and the Rights Agent and with every other holder of Rights:

 

a)                                     to be bound by and subject to theprovisions of this Agreement, as amended from time to time in accordance withthe terms hereof, in respect of all Rights held;

 

b)                                    that, prior to the Separation Time,each Right will be transferable only together with, and will be transferred bya transfer of, the associated Shares;

 

c)                                     that, after the Separation Time, theRights will be transferable only on the Rights Register as provided herein;

 

d)                                    that prior to due presentment of aRights Certificate (or, prior to the Separation Time, the associated share certificaterepresenting the Shares) for registration of transfer, the Corporation, theRights Agent and any agent of the Corporation or the Rights Agent may deem andtreat the Person in whose name the Rights Certificate (or, prior to theSeparation Time, the associated Shares certificate) is registered as theabsolute owner thereof and of the Rights evidenced thereby (notwithstanding anynotations of ownership or writing on such Rights Certificate or the associatedshare certificate made by anyone other than the Corporation or the RightsAgent) for all purposes whatsoever, and neither the Corporation nor the RightsAgent shall be affected by any notice to the contrary;

 

e)                                     that such holder of Rights haswaived its right to receive any fractional Rights or any fractional Shares orother securities upon exercise of a Right (except as provided herein);

 

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f)                                       that, subject to the provisions of Section 5.4,without the approval of any holder of Rights or Voting Shares and upon the soleauthority of the Board of Directors acting in good faith, this Agreement may besupplemented or amended from time to time as provided herein; and

 

g)                                    that notwithstanding anything inthis Agreement to the contrary, neither the Corporation nor the Rights Agentshall have any liability to any holder of a Right or any other Person as aresult of its inability to perform any of its obligations under this Agreementby reason of any preliminary or permanent injunction or other order, decree orruling issued by a court of competent jurisdiction or by a governmental,regulatory or administrative agency or commission, or any statute, rule,regulation or executive order promulgated or enacted by any governmentalauthority, prohibiting or otherwise restraining performance of such obligation.

 

**ARTICLE 3**

**ADJUSTMENTS TO THE RIGHTS**

** **

**3.1**                               Flip-in Event

** **

a)                                     Subject to Sections 3.1(b) and5.1, in the event that prior to the Expiration Time a Flip-in Event occurs,each Right shall thereafter constitute the right to purchase from theCorporation, upon exercise thereof in accordance with the terms hereof, thatnumber of Shares as have an aggregate Market Price on the date of consummationor occurrence of such Flip-in Event equal to twice the Exercise Price for anamount in cash equal to the Exercise Price (such Right to be appropriatelyadjusted in a manner analogous to the applicable adjustment provided for in Section 2.3in the event that, after such date of consummation or occurrence, an event of atype analogous to any of the events described in Section 2.3 shall haveoccurred with respect to such Shares).

 

b)                                    Notwithstanding anything in thisAgreement to the contrary, upon the occurrence of any Flip-in Event, any Rightsthat are or were Beneficially Owned on or after the earlier of the SeparationTime and the Stock Acquisition Date, or which may thereafter be BeneficiallyOwned, by:

 

(i)                                   an Acquiring Person (or any Affiliate or Associate of an AcquiringPerson or any other Person acting jointly or in concert with an AcquiringPerson or any Associate or Affiliate of such other Person); or

 

(ii)                                 a transferee of Rights, direct or indirect, from an Acquiring Person(or from any Affiliate or Associate of an Acquiring Person or any Person actingjointly or in concert with an Acquiring Person or any Associate or Affiliatethereof) where such a transferee becomes a transferee concurrently with orsubsequent to the Acquiring Person becoming such in a transfer that the Boardof Directors, acting in good faith, has determined is part of a plan,arrangement or scheme of an Acquiring Person (or of any Person acting jointlyor in concert with an Acquiring Person or any Associate or Affiliate of anAcquiring Person), that has the purpose or effect of avoiding clause 3.1(b)(i);

 

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shall become null and void without anyfurther action and any holder of such Rights (including any transferee of, orother successor entitled to, such Rights, whether directly or indirectly) shallthereafter have no right to exercise such Rights under any provisions of thisAgreement and further shall thereafter not have any rights whatsoever withrespect to such Rights, whether under any provision of this Agreement orotherwise. The holder of any Rights represented by a Rights Certificate whichis submitted to the Rights Agent upon exercise or for registration of transferor exchange which does not contain the necessary certifications set forth inthe Rights Certificate establishing that such Rights are not void under thisSubsection 3.1(b) shall be deemed to be an Acquiring Person for thepurposes of this Subsection 3.1(b) and such Rights shall become nulland void.

 

c)                                     Any Rights Certificate thatrepresents Rights Beneficially Owned by a Person described in either ofclauses 3.1b)(i) or 3.1b)(ii)  or transferred to any Nominee ofany such Person, and any Rights Certificate issued upon transfer, exchange,replacement or adjustment of any other Rights Certificate referred to in thissentence, shall contain or will be deemed to contain the following legend:

 

“The Rights represented by this Rights Certificate were issued to aPerson who was an Acquiring Person or an Affiliate or an Associate of anAcquiring Person (as such terms are defined in the Rights Agreement) or to aPerson acting jointly or in concert with any of them. This Rights Certificateand the Rights represented hereby shall be void in the circumstances specifiedin Subsection 3.1(b) of the Rights Agreement.

 

Les Droits représentés par le présent certificatde Droits ont été émis à une personne qui était une personne faisant uneacquisition ou un membre du même groupe qu’elle ou une personne avec qui elleavait des liens (selon la définition de ces termes dans la convention visantles Droits) ou à une personne agissant conjointement ou de concert avec l’un deceux-ci. Le présent certificat de Droits et les Droits représentés par celui-ciseront nuls dans les circonstances précisées à l’alinéa 3.1(b) de laconvention visant les Droits.”

 

The RightsAgent shall not be under any responsibility to ascertain the existence of factsthat would require the impositionof such legend but shall be required to impose such legend only if instructedto do so in writing by the Corporation or if a holder fails to certify upontransfer or exchange in the space provided to do so that such holder is not aPerson described in such legend.

 

d)                                    After the Separation Time, theCorporation shall do all such acts and things necessary and within its power toensure compliance with the provisions of this Section 3.1 including,without limitation, all such acts and things as may be required to satisfy therequirements of the Canada Business Corporations Act, the Securities Act andthe securities laws or comparable legislation in each of the provinces ofCanada and in any other jurisdiction where the Corporation is subject to suchlaws and the rules of the stock exchanges or quotation systems where theShares are listed or quoted at such time in respect of the issue of Shares uponthe exercise of Rights in accordance with this Agreement.

 

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**3.2**                               Fiduciary Duties of the Board ofDirectors of the Corporation

** **

Forclarification, it is understood that nothing contained in this**Article 3 shall be considered to affect theobligations of the Board of Directors to exercise its fiduciary duties. Withoutlimiting the generality of the foregoing, nothing contained herein shall beconstrued to suggest or imply that the Board of Directors shall not be entitledto recommend that holders of the Voting Shares reject or accept any Take-overBid or take any other action including, without limitation, the commencement,prosecution, defence or settlement of any litigation and the submission ofadditional or alternative Take-over Bids or other proposals to the shareholdersof the Corporation with respect to any Take-over Bid or otherwise that theBoard of Directors believes is necessary or appropriate in the exercise of itsfiduciary duties.

 

**ARTICLE 4**

**THE RIGHTS AGENT**

** **

**4.1**                               General

** **

a)                                     The Corporation hereby appoints theRights Agent to act as agent for the Corporation and the holders of the Rightsin accordance with the terms and conditions hereof, and the Rights Agent herebyaccepts such appointment. The Corporation may from time to time appoint suchco-rights agents (“**Co-Rights Agents**”)as it may deem necessary or desirable subject to the prior written approval ofthe Rights Agent. In the event the Corporation appoints one or more Co-RightsAgents, the respective duties of the Rights Agent and Co-Rights Agents shall beas the Corporation may determine with the written approval of the Rights Agent.The Corporation agrees to pay to the Rights Agent reasonable compensation forall services rendered by it hereunder and, from time to time, on demand of theRights Agent, its reasonable expenses and other disbursements reasonablyincurred in the administration and execution of this Agreement and the exerciseand performance of its duties hereunder, including the reasonable fees anddisbursements of counsel and other experts consulted by the Rights Agentpursuant to Subsection 4.3(a). The Corporation also agrees to indemnifythe Rights Agent, its officers, directors, employees and agents for, and tohold it harmless against any loss, liability, cost, claim, action, damage, suitor expense, incurred without negligence, bad faith or willful misconduct on thepart of the Rights Agent for anything done or omitted by the Rights Agent inconnection with the acceptance and administration of this Agreement includingits reasonable legal costs and expenses, which right to indemnification willsurvive the termination of this Agreement or the removal or resignation of theRights Agent.

 

b)                                    The Rights Agent shall be protected andshall incur no liability for or in respect of any action taken, suffered oromitted by it in connection with its administration of this Agreement inreliance upon any certificate for Shares, Rights Certificate, certificate forother securities of the Corporation, instrument of assignment or transfer,power of attorney, endorsement, affidavit, letter, notice, direction, consent,certificate, statement, or other paper or document believed by it to be genuineand to be signed, executed and, where necessary, verified or acknowledged, bythe proper Person or Persons.

 

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c)                                     The Corporation shall inform theRights Agent in a reasonably timely manner of events which may materiallyaffect the administration of this Agreement by the Rights Agent and, at anytime upon request, shall provide to the Rights Agent an incumbency certificatecertifying the then current officers of the Corporation.

 

**4.2**                               Merger, Amalgamation, Consolidationor Change of Name of Rights Agent

** **

a)                                     Any corporation into which theRights Agent or any successor Rights Agent may be merged or amalgamated or withwhich it may be consolidated, or any corporation resulting from any merger,amalgamation or consolidation to which the Rights Agent or any successor RightsAgent is a party, or any corporation succeeding to the shareholder servicesbusiness of the Rights Agent or any successor Rights Agent, will be thesuccessor to the Rights Agent under this Agreement without the execution orfiling of any document or any further act on the part of any of the partieshereto, provided that such corporation would be eligible for appointment as asuccessor Rights Agent under the provisions of Section 4.4 hereof. In caseat the time such successor Rights Agent succeeds to the agency created by thisAgreement any of the Rights Certificates have been countersigned but notdelivered, any such successor Rights Agent may adopt the countersignature ofthe predecessor Rights Agent and deliver such Rights Certificates so countersigned;and in case at that time any of the Rights Certificates have not beencountersigned, any successor Rights Agent may countersign such RightsCertificates either in the name of the predecessor Rights Agent or in the nameof the successor Rights Agent; and in all such cases such Rights Certificateswill have the full**force provided in the RightsCertificates and in this Agreement.

 

b)                                    In case at any time the name of theRights Agent is changed and at such time any of the Rights Certificates shall havebeen countersigned but not delivered, the Rights Agent may adopt thecountersignature under its prior name and deliver Rights Certificates socountersigned; and in case at that time any of the Rights Certificates shallnot have been countersigned, the Rights Agent may countersign such RightsCertificates either in its prior name or in its changed name; and in all suchcases such Rights Certificates shall have the full force provided in the RightsCertificates and in this Agreement.

 

**4.3**                               Duties of Rights Agent

** **

TheRights Agent undertakes the duties and obligations imposed by this Agreementupon the following terms and conditions, by all of which the Corporation andthe holders of Rights Certificates, by their acceptance thereof, shall bebound:

 

a)                                     The Rights Agent may retain andconsult with legal counsel (who may be legal counsel for the Corporation) orsuch other experts that the Rights Agent considers necessary to carry out itsduties under this Agreement and the opinion of such counsel or other expertwill be full**and complete authorization andprotection to the Rights Agent as to any action taken or omitted by it in goodfaith and in accordance with such opinion; the Rights Agent may also, with theapproval of the Corporation (such approval not to be unreasonably withheld),consult with such other experts (at the expense of the Corporation) as theRights Agent shall consider necessary or appropriate to properly carry 

 

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out the dutiesand obligations imposed under this Agreement and the Rights Agent shall beentitled to act and rely in good faith on the advice of any such expert.

 

b)                                    Whenever in the performance of itsduties under this Agreement the Rights Agent deems it necessary or desirablethat any fact or matter be proved or established by the Corporation prior totaking or suffering any action hereunder, such fact or matter (unless otherevidence in respect thereof be herein specifically prescribed) may be deemed tobe conclusively proved and established by a certificate signed by a personbelieved by the Rights Agent to be a senior officer of the Corporation anddelivered to the Rights Agent; and such certificate will be full authorizationto the Rights Agent for any action taken or suffered in good faith by it underthe provisions of this Agreement in reliance upon such certificate.

 

c)                                     The Rights agent will be liablehereunder only for its own negligence, bad faith or wilful misconduct.

 

d)                                    The Rights Agent will not be liablefor or by reason of any of the statements of fact or recitals contained in thisAgreement or in the certificates for Shares, or the Rights Certificates (exceptits countersignature thereof) or be required to verify the same, and all suchstatements and recitals are and will be deemed to have been made by theCorporation only.

 

e)                                     The Rights Agent will not be underany responsibility in respect of the validity of this Agreement or theexecution and delivery hereof (except the due authorization, execution anddelivery hereof by the Rights Agent) or in respect of the validity or executionof any share certificate, or Rights Certificate (except its countersignaturethereon) nor will it be responsible for any breach by the Corporation of anycovenant or condition contained in this Agreement or in any Rights Certificate;nor will it be responsible for any change in the exercisability of the Rights(including the Rights becoming void pursuant to Subsection 3.1(b) hereofor any adjustment required under the provisions of Section 2.3) hereof orresponsible for the manner, method or amount of any such adjustment or theascertaining of the existence of facts that would require any such adjustment(except with respect to the exercise of Rights after receipt of the certificatecontemplated by Section 2.3 describing any such adjustment or any writtennotice from the Corporation or any holder that a Person has become an AcquiringPerson); nor will it by any act hereunder be deemed to make any representationor warranty as to the authorization of any Shares to be issued pursuant to thisAgreement or any Rights or as to any Shares, when issued, being duly andvalidly authorized, issued and delivered as fully paid and non-assessable.

 

f)                                       The Corporation agrees that it willperform, execute, acknowledge and deliver or cause to be performed, executed,acknowledged and delivered all such further and other acts, instruments andassurances as may reasonably be required by the Rights Agent for the carryingout or performing by the Rights Agent of the provisions of this Agreement.

 

g)                                    The Rights Agent is herebyauthorized and directed to accept instructions with respect to the performanceof its duties hereunder from any person designated in writing by the 

 

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Corporation,and to apply to such individuals for advice or instructions in connection withits duties, and it shall not be liable for any action taken or suffered by itin good faith in accordance with instructions of any such individual. It isunderstood that instructions to the Rights Agent shall, except wherecircumstances make it impractical or the Rights Agent otherwise agrees, begiven in writing and, where not in writing, such instructions shall beconfirmed in writing as soon as reasonably practicable after the giving of suchinstructions.

 

h)                                    Subject to applicable law, theRights Agent and any shareholder or director, officer or employee of the RightsAgent may buy, sell or deal in Shares, Rights or other securities of theCorporation or become pecuniarily interested in any transaction in which theCorporation may be interested, or contract with or lend money to theCorporation or otherwise act as fully and freely as though it were not theRights Agent under this Agreement. Nothing herein shall preclude the RightsAgent from acting in any other capacity for the Corporation or for any otherlegal entity.

 

i)                                        The Rights Agent may execute andexercise any of the rights or powers hereby vested in it or perform any dutyhereunder either itself or by or through its attorneys or agents, and theRights Agent will not be answerable or accountable for any act, default,neglect or misconduct of any such attorneys or agents or for any loss to theCorporation resulting from any such act, default, neglect or misconduct,provided reasonable care was exercised in the selection and continuedemployment of such attorneys and agents.

 

**4.4**                               Change of Rights Agent

** **

TheRights Agent may resign and be discharged from its duties under this Agreementby giving 60 days’ prior written notice (or such lesser notice as is acceptableto the Corporation) thereof to the Corporation, to each transfer agent ofShares and to the holders of the Rights, all in accordance with Section 5.9and at the expense of the Corporation. The Corporation may remove the RightsAgent by giving 30 days’ prior written notice thereof to the Rights Agent, toeach transfer agent of the Shares and to the holders of the Rights inaccordance with Section 5.9. If the Rights Agent should resign or beremoved or otherwise become incapable of acting, the Corporation will appoint asuccessor to the Rights Agent. If the Corporation fails to make suchappointment within a period of 30 days after such removal or after it has beennotified in writing of such resignation or incapacity by the resigning orincapacitated Rights Agent or by the holder of any Rights (which holder shall,with such notice, submit such holder’s Rights Certificate for inspection of theCorporation), then the holder of any Rights or the Rights Agent may apply toany court of competent jurisdiction for the appointment of a new Rights Agentat the Corporation’s expense. Any successor Rights Agent, whether appointed bythe Corporation or by such a court, must be a corporation incorporated underthe laws of Canada or a province thereof and authorized to carry on thebusiness of a trust company in the Province of Quebec. After appointment, thesuccessor Rights Agent will be vested with the same powers, rights, duties andresponsibilities as if it had been originally named as Rights Agent withoutfurther act or deed; but the predecessor Rights Agent, upon receipt of anyoutstanding fees and expenses then owing, shall deliver and transfer to thesuccessor Rights Agent any property at the time held by it hereunder, andexecute and deliver any further assurance, conveyance, act or deed necessaryfor the purpose. Not later than the effective date of any such appointment, theCorporation will file 

 

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noticethereof in writing with the predecessor Rights Agent and each transfer agent ofthe Shares and mail a notice thereof in writing to the holders of the Rights inaccordance with Section 5.9. Failure to give any notice provided for inthis Section 4.4, however, or any defect therein, shall not affect thelegality or validity of the resignation or removal of the Rights Agent or theappointment of the successor Rights Agent, as the case may be.

 

**ARTICLE 5**

**MISCELLANEOUS**

** **

**5.1**                               Redemption, Waiver and Termination

** **

a)                                     Subject to the prior consent of theholders of the Voting Shares or the Rights obtained as set forth herein, theBoard of Directors acting in good faith may, at any time prior to a Flip-inEvent as to which the application of Section 3.1 has not been waived pursuantto this Section 5.1, elect to redeem all but not less than all of the thenoutstanding Rights at a redemption price of $0.00001 per Right (appropriatelyadjusted in a manner analogous to the applicable adjustments provided for in Section 2.3in the event that an event of the type analogous to any of the events describedin Section 2.3 shall have occurred (such redemption price being hereinreferred to as the “**Redemption Price**”)).

 

b)                                    The Board of Directors shall waivethe application of Section 3.1 in respect of the occurrence of any Flip-inEvent if the Board of Directors has determined, following the Stock AcquisitionDate and prior to the Separation Time, that a Person became an Acquiring Personby inadvertence and without any intention to become, or knowledge that it wouldbecome, an Acquiring Person under this Agreement and, in the event that such awaiver is granted by the Board of Directors, such Stock Acquisition Date shallbe deemed not to have occurred. Any such waiver pursuant to this Subsection 5.1(b) mayonly be given on the condition that such Person, within 10 days after theforegoing determination by the Board of Directors or such later date as theBoard of Directors may determine (the “**Disposition Date**”),has reduced its Beneficial Ownership of Voting Shares such that the Person isno longer an Acquiring Person. If the Person remains an Acquiring Person at theClose of Business on the Disposition Date, the Disposition Date shall be deemedto be the date of occurrence of a further Stock Acquisition Date and Section 3.1shall apply thereto.

 

c)                                     In the event that a Person acquiresVoting Shares pursuant to a Permitted Bid or an Exempt Acquisition referred toin Subsection 5.l(d), then the Board of Directors of the Corporationshall, immediately upon the consummation of such acquisition and withoutfurther formality, be deemed to have elected to redeem the Rights at theRedemption Price.

 

d)                                    The Board of Directors acting ingood faith may, prior to the occurrence of the relevant Flip-in Event, uponprior written notice delivered to the Rights Agent, determine to waive theapplication of Section 3.1 to a Flip-in Event that may occur by reason ofa Take-over Bid made by means of a take-over bid circular to all holders ofrecord of Voting Shares, provided that if the Board of Directors waives theapplication of Section 3.1 in respect of a Take-over Bid pursuant to thisSubsection 5.1(d), the Board of Directors shall also be 

 

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deemed to havewaived the application of Section 3.1 in respect of any other Take-overBid made by means of a take-over bid circular to all holders of record ofVoting Shares prior to the expiry of any Take-over Bid (as the same may beextended from time to time) in respect of which a waiver is, or is deemed tohave been, granted under this Subsection 5.1(d).

 

e)                                     The Board of Directors acting ingood faith may with the prior consent of the holders of Voting Shares obtainedas set forth herein, prior to the occurrence of the relevant Flip-in Event,upon prior written notice delivered to the Rights Agent, determine to waive theapplication of Section 3.1 to a Flip-in Event that may occur by reason ofan acquisition of Voting Shares other than pursuant to a Take-over Bid made bymeans of a take-over bid circular to all holders of record of Voting Shares andother than in the circumstances set out in Subsection 5.1(b).  In the event that the Board of Directorsproposes such a waiver, the Board of Directors shall extend the Separation Timeto a time and date subsequent to and not more than 10 Business Daysfollowing the meeting of shareholders held to approve such waiver.

 

f)                                       Where a Take-over Bid that is not aPermitted Bid is withdrawn or otherwise terminated after the Separation Time hasoccurred and prior to the occurrence of a Flip-in Event, the Board of Directorsmay elect to redeem all the outstanding Rights at the Redemption Price withoutthe consent of the holders of the Voting Shares or the Rights and reissueRights under this Agreement to holders of record of Voting Shares immediatelyfollowing such redemption. Upon the Rights being redeemed and reissued pursuantto this Subsection 5.1(f), all the provisions of this Agreement shallcontinue to apply as if the Separation Time had not occurred and RightsCertificates representing the number of Rights held by each holder of record ofShares at the Separation Time had not been mailed to each such holder, and forall purposes of this Agreement the Separation Time shall be deemed not to haveoccurred and the Corporation shall be deemed to have issued replacement Rightsto the holders of its then outstanding Shares.

 

g)                                    If the Board of Directors is deemedunder Subsection 5.1(c) to have elected or elects underSubsection 5.1(a) to redeem the Rights, the right to exercise theRights will thereupon, without further action and without notice, terminate andthe only right thereafter of the holders of Rights shall be to receive theRedemption Price.

 

h)                                    Within 10 days after the Board ofDirectors is deemed under Subsection 5.1(c) to have elected or electsunder Subsection 5.1(a) or (f) to redeem the Rights, theCorporation shall give notice of redemption to the holders of the thenoutstanding Rights by mailing such notice to each such holder at his lastaddress as it appears upon the registry books of the Rights Agent or, prior tothe Separation Time, on the registry books of the transfer agent for the VotingShares.  Any notice which is mailed inthe manner herein provided shall be deemed given, whether or not the holderreceives the notice. Each such notice of redemption will state the method bywhich the payment of the Redemption Price will be made.

 

i)                                        If a redemption of Rights pursuantto Subsection 5.1(a) or a waiver of a Flip-in Event pursuant toSubsection 5.1(e) is proposed at any time prior to the SeparationTime, such 

 

35

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redemption orwaiver shall be submitted for approval to the holders of Voting Shares.  Such approval shall be deemed to have beengiven if the redemption or waiver is approved by the affirmative vote of amajority of the votes cast by Independent Shareholders represented in person orby proxy at a meeting of such holders duly held in accordance with applicablelaws and the Corporation’s by-laws.

 

j)                                       If a redemption of Rights pursuantto Subsection 5.1(a) or a waiver of a Flip-in Event pursuant toSubsection 5.1(e) is proposed at any time after the Separation Time,such redemption or waiver shall be submitted for approval to the holders ofRights.  Such approval shall be deemed tohave been given if the redemption or waiver is approved by holders of Rights asset forth in Subsection 5.4(d).

 

**5.2**                               Expiration

** **

NoPerson will have any rights pursuant to this Agreement or in respect of anyRight after the Expiration Time, except in respect of any right to receivecash, securities or other property which has accrued at the Expiration Time andexcept as specified in Subsections 4.1(a) and 4.1(b) hereof.

 

**5.3**                               Issuance of New Rights Certificates

** **

Notwithstandingany of the provisions of this Agreement or of the Rights to the contrary, theCorporation may, at its option, issue new Rights Certificates evidencing Rightsin such form as may be approved by its Board of Directors to reflect anyadjustment or change in the number or kind or class of shares purchasable uponexercise of Rights made in accordance with the provisions of this Agreement.

 

**5.4**                               Supplements and Amendments

** **

a)                                     Subject to Subsections 5.4(b) and(c) and this Subsection 5.4(a), the Corporation may from time to timeamend, vary or delete any of the provisions of this Agreement and the Rightsprovided that no amendment, variation or deletion made on or after the date ofthe meeting of shareholders at which the resolution referred to in Section 5.20is to be considered shall be made without the prior consent of the holders ofthe Rights, given as provided in Subsection 5.4(b) below, except thatamendments, variations or deletions made for any of the following purposesshall not require such prior approval but shall be subject to subsequentratification in accordance with Subsection 5.4(b):

 

(i)                                  in order to make such changes as are necessary in order to maintainthe validity of this Agreement and the Rights as a result of any change in anyapplicable legislation, regulations or rules; or

 

(ii)                               in order to make such changes as are necessary in order to cure anyclerical or typographical error.

 

b)                                    Any amendment, variation or deletionto or from this Agreement made by the Board of Directors pursuant toSubsection 5.4(a) shall:

 

36

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(i)                                   if made prior to the Separation Time, be submitted to theshareholders of the Corporation at the next meeting of shareholders and theshareholders may, by resolution passed by a majority of the votes cast byIndependent Shareholders who vote in respect of such amendment, variation ordeletion, confirm or reject such amendment or supplement; or

 

(ii)                                if made after the Separation Time, be submitted to the holders ofRights at a meeting to be held on a date not later than the date of the nextmeeting of shareholders of the Corporation and the holders of Rights may, byresolution passed by a majority of the votes cast by the holders of Rightswhich have not become void pursuant to Subsection 3.1(b) who vote inrespect of such amendment, variation or deletion, confirm or reject suchamendment or supplement.

 

Anyamendment, variation or deletion pursuant to Subsection 5.4(a) shallbe effective only when so consented to by the holders of Voting Shares orRights, as applicable (except in the case of an amendment, variation ordeletion referred to in any of clauses 5.4(a)(i) or (ii), which shall be effective from the date of the resolution of theBoard of Directors adopting such amendment, variation or deletion and shallcontinue in effect until it ceases to be effective (as in this paragraphdescribed) and, where such amendment, variation or deletion is confirmed, itshall continue in effect in the form so confirmed). If an amendment, variationor deletion pursuant to clause 5.4(a)(i) or (ii) is rejected by theshareholders or the holders of Rights or is not submitted to the shareholdersor holders of Rights as required, then such amendment, variation or deletionshall cease to be effective from and after the termination of the meeting atwhich it was rejected or to which it should have been but was not submitted orfrom and after the date of the meeting of holders of Rights that should havebeen but was not held, and no subsequent resolution of the Board of Directorsto amend, vary or delete any provision of this Agreement to substantially thesame effect shall be effective until confirmed by the shareholders or holdersof Rights, as the case may be.

 

c)                                     For greater certainty andnotwithstanding anything herein contained, (i) the Corporation, at orprior to the meeting of shareholders referred to in Section 5.20 or anyadjournment or postponement thereof, may supplement or amend this Agreementwithout the approval of any holders of Rights or Voting Shares in order to makeany changes that the Board of Directors acting in good faith may deem necessaryor desirable, (ii) no amendment, variation or deletion to the provisionsof Article 4 shall be made except with the concurrence of the Rights Agentthereto, and (iii) neither the exercise by the Board of Directors of anypower or discretion conferred on it hereunder nor the making by the Board ofDirectors of any determination or the granting of any waiver it is permitted tomake or give hereunder shall constitute an amendment, variation or deletion ofthe provisions of this Agreement or the Rights, for purposes of this Section 5.4or otherwise.

 

d)                                    The approval, confirmation orconsent of the holders of Rights with respect to any matter arising hereundershall be deemed to have been given if the action requiring such approval,confirmation or consent is authorized by the affirmative votes of the holdersof Rights present or represented at and entitled to be voted at a meeting ofthe holders of 

 

37

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Rights andrepresenting a majority of the votes cast in respect thereof. For the purposeshereof, each outstanding Right (other than Rights which are void pursuant tothe provisions hereof or which, prior to the Separation Time, are heldotherwise than by Independent Shareholders) shall be entitled to one vote, andthe procedures for the calling, holding and conduct of the meeting shall bethose, as nearly as may be, which are provided in the Corporation’s by-laws andthe Canada Business Corporations Act with respect to meetings ofshareholders of the Corporation.

 

e)                                     The Corporation shall be required toprovide the Rights Agent with notice in writing of any such amendment,variation or deletion to this Agreement as referred to in this Section 5.4within 5 days of effecting such amendment, variation or deletion.

 

f)                                       Any supplement or amendment to this Agreement pursuant to Subsections5.4 (b) through  (e) shall be subject to the receipt ofany requisite approval or consent from any governmental or regulatory authorityhaving jurisdiction over the Corporation, including without limitation anyrequisite approval of stock exchanges on which the Shares are listed.

 

**5.5**                               Fractional Rights and FractionalShares

** **

a)                                     The Corporation will not be requiredto issue fractions of Rights or to distribute Rights Certificates whichevidence fractional Rights. After the Separation Time there shall be paid, inlieu of such fractional Rights, to the registered holders of the Rights Certificates with regard to which fractionalRights would otherwise be issuable, an amount in cash equal to the samefraction of the Market Price of a whole Right. The Rights Agent shall have noobligation to make any payments in lieu of fractional Rights unless theCorporation shall have provided the Rights Agent with the necessary funds topay in full all amounts payable in accordance with Subsection 2.2(e).

 

b)                                    The Corporation shall not berequired to issue fractional Shares upon exercise of the Rights or todistribute certificates that evidence fractional Shares. In lieu of issuingfractional Shares, the Corporation shall pay to the registered holder of RightsCertificates at the time such Rights are exercised as herein provided, anamount in cash equal to the same fraction of the Market Price of one Share atthe date of such exercise. The Rights Agent shall have no obligation to makeany payments in lieu of fractional Shares unless the Corporation shall haveprovided the Rights Agent with the necessary funds to pay in full all amountspayable in accordance with Subsection 2.2(e).

 

**5.6**                               Rights of Action

** **

Subjectto the terms of this Agreement, rights of action in respect of this Agreement,other than rights of action vested solely in the Rights Agent, are vested inthe respective holders of the Rights; and any holder of any Rights, without theconsent of the Rights Agent or of the holder of any other Rights may, on suchholder’s own behalf and for such holder’s own benefit and the benefit of otherholders of Rights, enforce, and may institute and maintain any suit, action orproceeding against the Corporation to enforce, or otherwise act in respect of,such holder’s right to exercise such holder’s Rights in the manner provided inthis Agreement and in such holder’s 

 

38

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RightsCertificate. Without limiting the foregoing or any remedies available to theholders of Rights, it is specifically acknowledged that the holders of Rightswould not have an adequate remedy at law for any breach of this Agreement andwill be entitled to specific performance of the obligations under, andinjunctive relief against actual or threatened violations of, the obligationsof any Person subject to this Agreement.

 

**5.7**                               Holder of Rights Not Deemed aShareholder

** **

Noholder, as such, of any Rights or Rights Certificate shall be entitled to vote,receive dividends or be deemed for any purpose the holder of Shares or anyother securities which may at any time be issuable on the exercise of Rights,nor shall anything contained herein or in any Rights Certificate be construedto confer upon the holder of any Rights, as such, any of the rights of ashareholder of the Corporation or any right to vote for the election of directorsor upon any matter submitted to shareholders at any meeting thereof, or to giveor withhold consent to any corporate action, or to receive notice of meetingsor other actions affecting shareholders (except as provided in Section 5.8hereof) or to receive dividends or subscription rights or otherwise, until suchRights shall have been exercised in accordance with the provisions hereof.

 

**5.8**                               Notice of Proposed Actions

** **

Incase the Corporation proposes after the Separation Time and prior to theExpiration Time to effect the liquidation, dissolution or winding up of theCorporation or the sale of all or substantially all of the Corporation’sassets, then, in each such case, the Corporation shall give to each holder of aRight, in accordance with Section 5.9 hereof, a notice of such proposedaction, which shall specify the date on which such liquidation, dissolution,winding-up or sale is to take place, and such notice shall be so given at least20 Business Days prior to the date of the taking of such proposed action by theCorporation.

 

**5.9**                               Notices

** **

Noticesor demands authorized or required by this Agreement to be given or made to orby the Rights Agent, the holder of any Rights or the Corporation will besufficiently given or made and shall be deemed to be received if delivered orsent by first-class mail, postage prepaid, or by fax machine or other means ofprinted telecommunication, charges prepaid and confirmed in writing by mail ordelivery, addressed (until another address is filed in writing with the RightsAgent or the Corporation, as applicable), as follows:

 
| (a)    | if  to the Corporation:                |
|--------|----------------------------------------|
|   |                                   |
|   | Æterna Zentaris Inc.              |
|   | 1405, boulevard du  Parc-Technologique |
|   | Québec, QC G1P 4P5                |
|   |                                   |
|   | Attention:                             | Corporate Secretary |
|   |                                   |
|   | Facsimile No. (418) 652-0881      |

 

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| (b)    | if  to the Rights Agent:                                                                                                                                                                                            |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                |
|   | Computershare  Trust Company of Canada                                                                                                                                                                              |
|   | 1500  University                                                                                                                                                                                                    |
|   | Suite 700                                                                                                                                                                                                      |
|   | Montreal,  QC H3A 3S8                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                |
|   | Attention:                                                                                                                                                                                                          | Manager,  Investor Services |
|   | Facsimile  No. (514) 982-7580                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                |
| (c)    | if  to the holder of any Rights, to the address of such holder as it appears on  the registry books of the Rights Agent or, prior to the Separation Time, on  the registry books of the Corporation for the Shares. |

 

**5.10**                        Costs of Enforcement

** **

TheCorporation agrees that if the Corporation or any other Person the securitiesof which are purchasable upon exercise of Rights fails to fulfil any of itsobligations pursuant to this Agreement, then the Corporation or such Personwill reimburse the holder of any Rights for the costs and expenses (includinglegal fees) incurred by such holder in actions to enforce his rights pursuantto any Rights or this Agreement.

 

**5.11**                        Regulatory Approvals

** **

Anyobligation of the Corporation or action or event contemplated by this Agreementshall be subject to applicable law and to the receipt of any requisite approvalor consent from any governmental or regulatory authority. Without limiting thegenerality of the foregoing, any issuance or delivery of debt or equitysecurities (other than non-convertible debt securities) of the Corporation uponthe exercise of Rights and any amendment to this Agreement shall be subject toany required prior consent of the stock exchange(s) on which theCorporation is from time to time listed or has been listed during the sixmonths prior to such amendment.

 

**5.12**                        Declaration as to Non-Canadian andNon-U.S. Holders

** **

Ifin the opinion of the Board of Directors (who may rely upon the advice ofcounsel), any action or event contemplated by this Agreement would requirecompliance with the securities laws or comparable legislation of a jurisdictionoutside Canada and the United States of America, its territories andpossessions, the Board of Directors acting in good faith may take such actionsas it may deem appropriate to ensure that such compliance is not required,including without limitation establishing procedures for the issuance to aCanadian resident Fiduciary of Rights or securities issuable on exercise ofRights, the holding thereof in trust for the Persons entitled thereto (butreserving to the Fiduciary or to the Fiduciary and the Corporation, as theCorporation may determine, absolute discretion with respect thereto) and thesale thereof and remittance of the proceeds of such sale, if any, to thePersons entitled thereto.  In no eventshall the Corporation or the Rights Agent be required to issue or deliverRights or securities issuable on exercise of Rights to Persons who arecitizens, residents or nationals of any jurisdiction other than Canada and aprovince or territory thereof and the United States of America and any state 

 

40

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thereofin which such issue or delivery would be unlawful without registration of therelevant Persons or securities for such purposes.

 

**5.13**                        Successors

** **

Allthe covenants and provisions of this Agreement by or for the benefit of theCorporation or the Rights Agent shall bind and enure to the benefit of theirrespective successors and assigns hereunder.

 

**5.14**                        Benefits of this Agreement

** **

Nothingin this Agreement shall be construed to give to any Person other than theCorporation, the Rights Agent and the holders of the Rights any legal orequitable right, remedy or claim under this Agreement; this Agreement shall befor the sole and exclusive benefit of the Corporation, the Rights Agent and theholders of the Rights.

 

**5.15**                        Determination and Actions by theBoard of Directors

** **

Allactions, calculations, interpretations and determinations (including allomissions with respect to the foregoing) which are done or made by the Board ofDirectors pursuant to this Agreement, in good faith, (i) may be relied onby the Rights Agent, and (ii) shall not subject the Board of Directors toany liability to the holders of the Rights or to any other parties.

 

**5.16**                        Governing Law

** **

ThisAgreement and the Rights issued hereunder shall be deemed to be a contract madeunder the laws of the Province of Quebec and the laws of Canada applicabletherein and for all purposes will be governed by and construed in accordancewith the laws of such province applicable to contracts to be made and performedentirely within such province.

 

**5.17**                        Language

** **

Les parties aux présentes ont exigé que la présente convention ainsique tous les documents et avis qui s’y rattachent ou qui en découlent soientrédigés en langue anglaise. The parties heretohave required that this Agreement and all documents and notices related theretoor resulting therefrom be drawn up in English.

 

**5.18**                        Counterparts

** **

ThisAgreement may be executed in any number of counterparts and each of such counterpartswill for all purposes be deemed to be an original, and all such counterpartsshall together constitute one and the same instrument.

 

**5.19**                        Severability

** **

Ifany term or provision hereof or the application thereof to any circumstance is,in any jurisdiction and to any extent, invalid or unenforceable, such term orprovision will be ineffective only to the extent of such invalidity orunenforceability in such jurisdiction without invalidating 

 

41

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orrendering unenforceable the remaining terms and provisions hereof or theenforceability thereof in any other jurisdiction or the application of suchterm or provision to circumstances other than those as to which it is heldinvalid or unenforceable.

 

**5.20**                        EffectiveDate

** **

The Original Agreement is effective and in full force and effect fromand after the Effective Date.  If amajority of the votes cast by the Independent Shareholders who vote in respectof a resolution to ratify and approve the continued existence of the OriginalAgreement and the amendment and restatement thereof as provided herein at theannual meeting of shareholders of the Corporation to be held in 2007 are votedin favour of such resolution, this Agreement shall, upon such approval of suchresolution, amend, restate and supersede the Original Agreement and shall bedeemed to be effective from and after the Effective Date.  If such resolution is not then so approved bythe aforesaid Independent Shareholders, this Agreement shall have no force oreffect. For greater certainty, unless a majority of the votes cast byIndependent Shareholders who vote in respect of such resolution are voted infavour of such resolution, the Board of Directors shall, immediately upon theconfirmation by the Chairman of such shareholders’ meeting of the result of thevote on such resolution and without further formality, be deemed to haveelected to redeem the Rights at the Redemption Price in accordance with theterms of the Original Agreement.

 

**5.21**                        Time of the Essence

** **

Timeshall be of the essence hereof.

 

42

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**IN WITNESS WHEREOF**, theparties hereto have caused this Agreement to be duly executed as of March 5,2007.

 
| ** ** | **ÆTERNA ZENTARIS INC.**              |
|------------|--------------------------------------------|
|       |                                       |   |
|       | By:                                        | /s/  Mario Paradis |
|       |                                       |   |
|       | Name:                                      | Mario  Paradis |
|       | Title:                                     | Corporate  Secretary |
|       |                                       |   |
|       |                                       |   |
| ** ** | **COMPUTERSHARE TRUST COMPANY OF  CANADA** |
|       |                                       |   |
|       | By:                                        | /s/  Martine Gauthier |
|       |                                       |   |
|       | Name:                                      | Martine  Gauthier |
|       | Title:                                     | Relationship  Manager, Client Services |
|       |                                       |   |
|       | By:                                        | /s/  Julien Lavallière |
|       |                                       |   |
|       | Name:                                      | Julien  Lavallière |
|       | Title:                                     | Relationship  Manager, Client Services |

 

43

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**EXHIBIT A**

 

Form of Rights Certificate

 

CertificateNo.       Rights

 

THERIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THETERMS SET FORTH IN THE SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAINCIRCUMSTANCES (SPECIFIED IN SUBSECTION 3.1(b) OF SUCH AGREEMENT),RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON, CERTAIN RELATED PARTIES OF ANACQUIRING PERSON OR A TRANSFEREE OF AN ACQUIRING PERSON OR ANY SUCH RELATEDPARTIES WILL BECOME VOID WITHOUT FURTHER ACTION.

 

**Rights Certificate**

 

Thiscertifies that l is the registered holder of the number of Rights set forth above,each of which entitles the registered holder thereof, subject to the terms,provisions and conditions of the Amended and Restated Shareholder Rights PlanAgreement made as of March 5, 2007 between Æterna Zentaris Inc., acorporation existing under the laws of Canada (the “**Corporation**”)and Computershare Trust Company of Canada, a trust company incorporated underthe laws of Canada, as Rights Agent (the “**Rights Agent**”),which term shall include any successor Rights Agent under the Rights Agreement,as such agreement may from time to time be amended, varied, restated orreplaced (the “**Rights Agreement**”), to purchasefrom the Corporation, at any time after the Separation Time and prior to theExpiration Time (as such terms are defined in the Rights Agreement), one fullypaid Share (as defined in the Rights Agreement) at the Exercise Price referredto below, upon presentation and surrender of this Rights Certificate, togetherwith the Form of Election to Exercise appropriately completed and dulyexecuted, to the Rights Agent at its principal office in Montreal. Untiladjustment thereof in certain events as provided in the Rights Agreement, theExercise Price per Right shall be an aggregate dollar amount equal to theMarket Price (as defined in the Rights Agreement) per Share (determined as atthe Separation Time) multiplied by five (5) (payable by certified cheque,banker’s draft or money order payable to the order of the Rights Agent or bywire transfer to an account designated by the Rights Agent). The number ofShares which may be purchased for the Exercise Price is subject to adjustmentas set forth in the Rights Agreement.

 

ThisRights Certificate is subject to all of the terms, provisions and conditions ofthe Rights Agreement, which terms, provisions and conditions are herebyincorporated by reference and made a part hereof and to which Rights Agreementreference is hereby made for a full description of the rights, limitations ofrights, obligations, duties and immunities thereunder of the Rights Agent, theCorporation and the holders of the Rights Certificates. Copies of the RightsAgreement are on file at the registered office of the Corporation and areavailable upon written request.

 

ThisRights Certificate, with or without other Rights Certificates, upon surrenderat the principal office of the Rights Agent in Montreal, may be exchanged foranother Rights Certificate or

 

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RightsCertificates of like tenor evidencing an aggregate number of Rights equal tothe aggregate number of Rights evidenced by the Rights Certificate or RightsCertificates surrendered. If this Rights Certificate shall be exercised inpart, the registered holder shall be entitled to receive, upon surrenderhereof, another Rights Certificate or Rights Certificates for the number ofwhole Rights not exercised.

 

Subjectto the provisions of the Rights Agreement, the Rights evidenced by this RightsCertificate may be redeemed by the Corporation at a redemption price of$0.00001 per Right subject to adjustment in certain events.

 

Nofractional Shares will be issued upon the exercise of any Right or Rightsevidenced hereby, but in lieu thereof a cash payment will be made, as providedin the Rights Agreement.

 

Noholder of this Rights Certificate, as such, shall be entitled to vote orreceive dividends or be deemed for any purpose the holder of Shares or anyother securities which may at any time be issuable upon the exercise hereof,nor shall anything contained in the Rights Agreement or herein be construed toconfer upon the holder hereof, as such, any of the rights of a shareholder ofthe Corporation or any right to vote for the election of directors or upon anymatter submitted to shareholders at any meeting thereof, or to give or withholdconsent to any corporate action, or to receive notice of any meeting or otheractions affecting shareholders (except as provided in the Rights Agreement), orto receive dividends or subscription rights or otherwise, until the Rightsevidenced by this Rights Certificate shall have been exercised as provided inthe Rights Agreement.

 

ThisRights Certificate shall not be valid for any purpose until it shall have beencountersigned by the Rights Agent.

 

WITNESSthe facsimile signature of the proper officers of the Corporation.

 
| Date:      |                                                               |   |
|------------|--------------------------------------------------------------------|--------|
|       |                                                               |   |
| ** ** | **ÆTERNA ZENTARIS INC.**                                      |
|       |                                                               |   |
|       |                                                               |   |
|       | Per:                                                               |   |
|       |                                                               |   |
|       |                                                               |   |
|       | Per:                                                               |   |
|       |                                                               |   |
|       | Countersigned:                                                     |
|       |                                                               |   |
| ** ** | **COMPUTERSHARE TRUST COMPANY OF  CANADA,**in the City of Montreal |
|       |                                                               |   |
|       | Per:                                                               |   |

 

2

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**FORM OF ELECTION TO EXERCISE**

 

Theundersigned hereby irrevocably elects to exercise                                                  whole Rights represented by this Rights Certificate to purchase the Sharesissuable upon the exercise of such Rights and requests that certificates forsuch Shares be issued in the name of and delivered to:

 

 
|                                                                           |   |
|--------------------------------------------------------------------------------|--------|
|   Name                                                               |   |
|                                                                           |   |
|   Address                                                            |   |
|                                                                           |   |
|   City  and Province                                                 |   |
|                                                                           |   |
|   Social  Insurance No. or other taxpayer identification number |   |

 

 

Ifsuch number of Rights shall not be all the Rights evidenced by this RightsCertificate, a new Rights Certificate for the balance of such Rights shall beregistered in the name of and delivered to:

 

 
|                                                                           |   |
|--------------------------------------------------------------------------------|--------|
|   Name                                                               |   |
|                                                                           |   |
|   Address                                                            |   |
|                                                                           |   |
|   City  and Province                                                 |   |
|                                                                           |   |
|   Social  Insurance No. or other taxpayer identification number |   |

 

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| Date:                 |   |                                                                |   |
|-----------------------|--------|---------------------------------------------------------------------|--------|
|                  |   |                                                                |
|                  |   | Signature                                                           |
|                  |   |                                                                |
|                  |   | (Signature  must correspond to name as written upon the face of     |
|                  |   | this  Rights Certificate in every particular, without alteration or |
|                  |   | enlargement  or any change whatsoever)                              |
| Signature  Guaranteed |   |                                                                |

 

 

Signaturemust be signature guaranteed by a Schedule 1 Canadian chartered bank, aCanadian major trust company or a member firm of a recognized MedallionSignature Guarantee Program.

 

*(To be completed by the holder if true)*

 

Theundersigned hereby certifies and represents, for the benefit of the Corporationand all holders of Rights and Shares, that the Rights evidenced by this RightsCertificate are not and, to the knowledge of the undersigned, have never been,Beneficially Owned by an Acquiring Person or by an Affiliate or Associate of anAcquiring Person or any other Person acting jointly or in concert with any ofthe foregoing (as such terms are defined in the Rights Agreement).

 

 
|   |                                             |
|--------|--------------------------------------------------|
|   |   Signature                            |
|   |                                             |
|   |                                             |
|   |                                             |
|   |   (Please  print name below signature) |

 

**NOTICE**

 

**In the event that the certification set forth above in the Form ofElection to Exercise is not completed, the Corporation shall deem theBeneficial Owner of the Rights represented by this Rights Certificate to be anAcquiring Person (as defined in the Rights Agreement) and, accordingly, suchRights shall be null and void.**

 

2

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**FORM OF ASSIGNMENT**

 

FORVALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

(please printname and address of transferee) the Rights represented by this RightsCertificate, together with all right, title and interest therein. 

 
| Date:                 |   |                                                                                                                                                                       |   |
|-----------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                  |   |                                                                                                                                                                       |
|                  |   | Signature                                                                                                                                                                  |
|                  |   |                                                                                                                                                                       |
|                  |   |                                                                                                                                                                       |
|                  |   |                                                                                                                                                                       |
| Signature  Guaranteed |   | (Signature  must correspond to name as written upon the face of this Rights Certificate  in every particular, without alteration or enlargement or any change  whatsoever) |

 

 

Signaturemust be signature guaranteed by a Schedule 1 Canadian chartered bank, aCanadian major trust company or a member firm of a recognized Medallion SignatureGuarantee Program.

 

*(To be completed by the assignor if true)*

 

Theundersigned hereby certifies and represents, for the benefit of the Corporationand all holders of Rights and Shares, that the Rights evidenced by this RightsCertificate are not and, to the knowledge of the undersigned, have never been,Beneficially Owned by an Acquiring Person or by an Affiliate or Associate of anAcquiring Person or any other Person acting jointly or in concert with any ofthe foregoing (as such terms are defined in the Rights Agreement).

 
|   |                                             |
|--------|--------------------------------------------------|
|   |   Signature                            |
|   |                                             |
|   |   (Please  print name below signature) |

 

**NOTICE**

 

**In the event that the certification set forth above in the Form ofAssignment is not completed, the Corporation shall deem the Beneficial Owner ofthe Rights represented by this Rights Certificate to be an Acquiring Person (asdefined in the Rights Agreement) and, accordingly, such Rights shall be nulland void.**

 

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Certificat n**°                                                          **Droits

 

LES DROITS PEUVENT ÊTRE RACHETÉS, AU GRÉ DELA SOCIÉTÉ, SELON LES MODALITÉS INDIQUÉES DANS LA CONVENTION VISANT UN RÉGIMEDE DROITS DE SOUSCRIPTION DES ACTIONNAIRES. DANS CERTAINES CIRCONSTANCES(PRÉCISÉES À L’ALINÉA 3.1(b) DE CETTE CONVENTION), LES DROITS DÉTENUS ENPROPRIÉTÉ EFFECTIVE PAR UNE PERSONNE FAISANT UNE ACQUISITION, CERTAINES PARTIESAPPARENTÉES À UNE PERSONNE FAISANT UNE ACQUISITION OU LE CESSIONNAIRE D’UNEPERSONNE FAISANT UNE ACQUISITION OU D’UNE DE CES PARTIES APPARENTÉESDEVIENDRONT NULS SANS AUTRE FORMALITÉ.

 

**Certificat de Droits**

 

Les présentes attestent que l est le porteur inscrit du nombre deDroits indiqué ci-dessus, dont chacun permet au porteur inscrit des Droits,sous réserve des modalités, dispositions et conditions de la convention visantun régime de droits de souscription des actionnaires modifiée et mise à jourqui a été passée en date du 5 mars 2007 entre Æterna Zentaris Inc.,une société existant en vertu des lois du Canada (“**Société**”)et la Société de fiducie Computershare du Canada, société de fiducie constituéeen vertu des lois du Canada, en qualité d’agent des Droits (“**agent des Droits**”), terme qui comprend tout successeur de l’agentdes Droits conformément à la convention visant les Droits, comme cetteconvention peut de temps à autre être modifiée, mise à jour ou remplacée(« **convention visant les Droits** »), d’acheterauprès de la Société, en tout temps après l’heure de séparation et avant l’heured’expiration (selon la définition de ces termes dans la convention visant lesDroits) une action (selon la définition de ce terme dans la convention visantles Droits) entièrement libérée au prix d’exercice indiqué ci-dessous, surprésentation et remise du présent certificat de Droits, accompagné duformulaire de choix d’exercice adéquatement rempli et dûment signé, à l’agentdes Droits à son bureau principal de Montréal. Tant qu’il ne sera pas ajustédans certaines circonstances prévues dans la convention visant les Droits, leprix d’exercice pour chaque Droit sera un montant total en dollars égal aucours du marché (selon la définition de ce terme dans la convention visant lesDroits) par action (déterminé à l’heure de séparation) multiplié par cinq (5) (payablepar chèque certifié, traite bancaire ou mandat-poste établi à l’ordre de l’agentdes Droits ou par virement électronique à un compte désigné par l’agent desDroits). Le nombre d’actions pouvant être acheté pour le prix d’exercice peutfaire l’objet d’ajustements comme le stipule la convention visant les Droits.

 

Le présent certificat de Droits est assujettià toutes les modalités, dispositions et conditions de la convention visant lesDroits, lesquelles sont intégrées dans les présentes par renvoi et en fontpartie intégrante, convention à laquelle il est fait renvoi par les présentespour la description complète des droits, restrictions des droits, obligations,fonctions et immunités qu’elle confère à l’agent des Droits, à la Société etaux porteurs des certificats de Droits. Des copies de la convention visant lesDroits sont conservées au siège social de la Société et peuvent être obtenuessur demande écrite.

 

Le présent certificat de Droits, avec ou sansautres certificats de Droits, peut, sur remise au bureau principal de l’agentdes Droits à Montréal, être échangé contre un ou plusieurs autres certificatsde Droits de la même teneur attestant un nombre global de Droits égal au nombre

 

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global des Droits attestés par le ou lescertificats de Droits remis. Si le présent certificat de Droits est exercé enpartie, le porteur inscrit aura le droit de recevoir, sur remise de celui-ci,un ou plusieurs autres certificats de Droits représentant le nombre de Droitsentiers qui n’auront pas été exercés.

 

Sous réserve des dispositions de laconvention visant les Droits, les Droits attestés par le présent certificat deDroits peuvent être rachetés par la Société au prix de rachat de 0,00001 $par Droit, sous réserve d’ajustements dans certaines circonstances.

 

Aucune fraction d’action ne sera émise aumoment de l’exercice d’un ou de plusieurs Droits attestés par les présentesmais, en remplacement de celle-ci, un paiement comptant sera effectué comme leprévoit la convention visant les Droits.

 

Aucun porteur du présent certificat deDroits, en tant que tel, ne sera habile à voter ou à recevoir des dividendes nine sera réputé à quelque fin que ce soit être le porteur d’actions ou d’autrestitres pouvant être émissibles à un moment quelconque au moment de l’exercicedu présent certificat, et aucune disposition de la convention visant les Droitsou du présent certificat ne devra être interprétée comme conférant au porteurdu présent certificat, en tant que tel, l’un quelconque des droits d’unactionnaire de la Société ni le droit de voter en vue de l’élection d’administrateursou à l’égard de toute question soumise aux actionnaires à une assemblée deceux-ci, ni le droit d’approuver ou de s’abstenir d’approuver toute mesureprise par la Société, ni le droit de recevoir l’avis de convocation à quelqueassemblée des actionnaires que ce soit ou un avis des autres mesures visant lesactionnaires de la Société (sauf comme le prévoit la convention visant lesDroits), ni le droit de recevoir des dividendes ou des droits de souscriptionni quelque autre droit, et ce, tant que les Droits attestés par le présentcertificat de Droits n’auront pas été exercés comme le prévoit la conventionvisant les Droits.

 

Le présent certificat de Droits n’est pasvalide à quelque fin que ce soit tant qu’il n’a pas été contresigné par l’agentdes Droits.

 

EN FOI DE QUOI le fac-similé de la signaturedes dirigeants appropriés de la Société a été apposé sur le présent certificatde Droits.

 
| Date : |                                                                                     |   |
|-------------|------------------------------------------------------------------------------------------|--------|
|        |                                                                                     |   |
| ** **  | **ÆTERNA ZENTARIS INC.**                                                            |
|        |                                                                                     |   |
|        | Par :                                                                               |   |
|        |                                                                                     |   |
|        | Par :                                                                               |   |
|        |                                                                                     |   |
|        | Contresignature :                                                                   |
|        |                                                                                     |   |
| ** **  | **SOCIÉTÉ DE FIDUCIE  COMPUTERSHARE  DU CANADA**dans la ville de Montréal |
|        |                                                                                     |   |
|        | Par :                                                                               |   |

 

2

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**FORMULAIREDE CHOIX D’EXERCICE**

 

Par les présentes, le soussigné choisitirrévocablement d’exercer                                          Droits entiers attestés par le présent certificat de Droits en vue de l’achatdes actions émissibles au moment de l’exercice de ces Droits et demande que lescertificats attestant ces actions soient émis au nom de la personne suivante etlui soient livrés :

 
|                                                                                                         |   |
|--------------------------------------------------------------------------------------------------------------|--------|
|   Nom                                                                                              |   |
|                                                                                                         |   |
|                                                                                                         |   |
|   Adresse                                                                                          |   |
|                                                                                                         |   |
|                                                                                                         |   |
|   Ville et province                                                                                |   |
|                                                                                                         |   |
|                                                                                                         |   |
|   Numéro d’assurance sociale ou  autre numéro d’identification du contribuable |

 

 

Si ce nombre de Droits ne constitue pas latotalité des Droits attestés par le présent certificat de Droits, un nouveaucertificat de Droits attestant le reste de ces Droits sera immatriculé au nomde la personne suivante et lui sera livré :

 
|                                                                                                         |   |
|--------------------------------------------------------------------------------------------------------------|--------|
|   Nom                                                                                              |   |
|                                                                                                         |   |
|                                                                                                         |   |
|   Adresse                                                                                          |   |
|                                                                                                         |   |
|                                                                                                         |   |
|   Ville et province                                                                                |   |
|                                                                                                         |   |
|                                                                                                         |   |
|   Numéro d’assurance sociale ou  autre numéro d’identification du contribuable |

 

 
| Date :               |   |                                                              |   |
|---------------------------|--------|-------------------------------------------------------------------|--------|
|                      |   |                                                              |
|                      |   | Signature                                                         |
|                      |   |                                                              |
|                      |   |                                                              |
|                      |   | (La signature doit correspondre en tous  points au nom            |
|                      |   | apparaissant au recto du présent certificat  de Droits, sans |
| (Signature avalisée) |   | modification, ajout ni changement d’aucune  sorte.)          |

 

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La signature doit être avalisée par unebanque à charte canadienne de l’annexe 1, une grande société de fiduciecanadienne ou une firme membre d’un programme Medallion Signature Guaranteereconnu.

 

*(Attestationdevant être signée par le porteur si elle est exacte)*

 

Le soussigné atteste et déclare par lesprésentes, au profit de la Société et de tous les porteurs de Droits et d’actions,que les Droits attestés par le présent certificat de Droits ne sont pas et, àla connaissance du soussigné, n’ont jamais été détenus en propriété effectivepar une personne faisant une acquisition ou un membre du même groupe qu’elle ouune personne avec qui elle a des liens ou une autre personne agissantconjointement ou de concert avec l’un de ceux-ci (selon la définition de cestermes dans la convention visant les Droits).

 
|   |                                                                                              |
|--------|---------------------------------------------------------------------------------------------------|
|   |   Signature                                                                             |
|   |                                                                                              |
|   |                                                                                              |
|   |   (Veuillez écrire le nom en  lettres moulées sous    la signature) |

 

 

**AVIS**

 

**Si l’attestation figurant ci-dessus dans leformulaire de choix d’exercice n’est pas signée, la Société considérera levéritable propriétaire des Droits représentés par le présent certificat de Droitscomme une personne faisant une acquisition (selon la définition donnée dans laconvention visant les Droits) et, par conséquent, ces Droits seront nuls et nonavenus.**

 

2

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**FORMULAIREDE CESSION**

 

CONTRE VALEUR REÇUE, le soussigné vend, cèdeet transfère par les présentes à

 

 

(veuillez écrire le nom et l’adresse ducessionnaire en lettres moulées) les Droits représentés par le présentcertificat de Droits, de même que tous les droits, titres et intérêts s’yattachant.

 
| Date :               |   |                                                              |   |
|---------------------------|--------|-------------------------------------------------------------------|--------|
|                      |   |                                                              |
|                      |   | Signature                                                         |
|                      |   |                                                              |
|                      |   |                                                              |
|                      |   | (La signature doit correspondre en tous  points au nom            |
|                      |   | apparaissant au recto du présent certificat  de Droits, sans |
| (Signature avalisée) |   | modification, ajout ni changement d’aucune  sorte.)          |

 

 

La signature doit être avalisée par unebanque à charte canadienne de l’annexe 1, une grande société de fiduciecanadienne ou une firme membre d’un programme Medallion Signature Guaranteereconnu.

 

*(Attestationdevant être signée par le cédant si elle est exacte)*

 

Le soussigné atteste et déclare par lesprésentes, au profit de la Société et de tous les porteurs de Droits et d’actions,que les Droits attestés par le présent certificat de Droits ne sont pas et, àla connaissance du soussigné, n’ont jamais été détenus en propriété effectivepar une personne faisant une acquisition ou un membre du même groupe qu’elle ouune personne avec qui elle a des liens ou une autre personne agissantconjointement ou de concert avec l’un de ceux-ci (selon la définition de cestermes dans la convention visant les Droits).

 
|   |                                                                                              |
|--------|---------------------------------------------------------------------------------------------------|
|   |   Signature                                                                             |
|   |                                                                                              |
|   |                                                                                              |
|   |   (Veuillez écrire le nom en  lettres moulées sous    la signature) |

 

**AVIS**

 

**Si l’attestation figurant ci-dessus dans leformulaire de cession n’est pas signée, la Société considérera le véritablepropriétaire des Droits représentés par le présent certificat de Droits commeune personne faisant une acquisition (selon la définition donnée dans laconvention visant les Droits) et, par conséquent, ces Droits seront nuls et nonavenus.**

 

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